Correlation Between Absolent Group and ALM Equity
Can any of the company-specific risk be diversified away by investing in both Absolent Group and ALM Equity 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 Absolent Group and ALM Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolent Group AB and ALM Equity AB, you can compare the effects of market volatilities on Absolent Group and ALM Equity 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 Absolent Group with a short position of ALM Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolent Group and ALM Equity.
Diversification Opportunities for Absolent Group and ALM Equity
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Absolent and ALM is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Absolent Group AB and ALM Equity AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALM Equity AB and Absolent Group 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 Absolent Group AB are associated (or correlated) with ALM Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALM Equity AB has no effect on the direction of Absolent Group i.e., Absolent Group and ALM Equity go up and down completely randomly.
Pair Corralation between Absolent Group and ALM Equity
Assuming the 90 days trading horizon Absolent Group AB is expected to under-perform the ALM Equity. But the stock apears to be less risky and, when comparing its historical volatility, Absolent Group AB is 1.14 times less risky than ALM Equity. The stock trades about -0.16 of its potential returns per unit of risk. The ALM Equity AB is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 20,200 in ALM Equity AB on September 3, 2024 and sell it today you would lose (3,300) from holding ALM Equity AB or give up 16.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolent Group AB vs. ALM Equity AB
Performance |
| Timeline |
| Absolent Group AB |
| ALM Equity AB |
Absolent Group and ALM Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolent Group and ALM Equity
The main advantage of trading using opposite Absolent Group and ALM Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolent Group position performs unexpectedly, ALM Equity 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 ALM Equity will offset losses from the drop in ALM Equity's long position.| Absolent Group vs. Beijer Ref AB | Absolent Group vs. Indutrade AB | Absolent Group vs. Addtech AB | Absolent Group vs. Nolato AB |
| ALM Equity vs. ALM Equity AB | ALM Equity vs. Bufab Holding AB | ALM Equity vs. Atrium Ljungberg AB | ALM Equity vs. Bravida Holding 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |