Correlation Between AAK AB and Humble Group
Can any of the company-specific risk be diversified away by investing in both AAK AB and Humble Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AAK AB and Humble Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAK AB and Humble Group AB, you can compare the effects of market volatilities on AAK AB and Humble Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AAK AB with a short position of Humble Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAK AB and Humble Group.
Diversification Opportunities for AAK AB and Humble Group
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AAK and Humble is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding AAK AB and Humble Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humble Group AB and AAK AB is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AAK AB are associated (or correlated) with Humble Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humble Group AB has no effect on the direction of AAK AB i.e., AAK AB and Humble Group go up and down completely randomly.
Pair Corralation between AAK AB and Humble Group
Assuming the 90 days trading horizon AAK AB is expected to generate 0.47 times more return on investment than Humble Group. However, AAK AB is 2.12 times less risky than Humble Group. It trades about 0.1 of its potential returns per unit of risk. Humble Group AB is currently generating about 0.03 per unit of risk. If you would invest 17,323 in AAK AB on September 14, 2024 and sell it today you would earn a total of 14,217 from holding AAK AB or generate 82.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAK AB vs. Humble Group AB
Performance |
| Timeline |
| AAK AB |
| Humble Group AB |
AAK AB and Humble Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAK AB and Humble Group
The main advantage of trading using opposite AAK AB and Humble Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAK AB position performs unexpectedly, Humble Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Humble Group will offset losses from the drop in Humble Group's long position.The idea behind AAK AB and Humble Group AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Humble Group vs. Samhllsbyggnadsbolaget i Norden | Humble Group vs. Media and Games | Humble Group vs. Hexatronic Group AB | Humble Group vs. Sinch AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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