Correlation Between Adventure Box and ALM Equity
Can any of the company-specific risk be diversified away by investing in both Adventure Box 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 Adventure Box and ALM Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adventure Box Technology and ALM Equity AB, you can compare the effects of market volatilities on Adventure Box 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 Adventure Box with a short position of ALM Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adventure Box and ALM Equity.
Diversification Opportunities for Adventure Box and ALM Equity
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adventure and ALM is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Adventure Box Technology 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 Adventure Box 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 Adventure Box Technology 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 Adventure Box i.e., Adventure Box and ALM Equity go up and down completely randomly.
Pair Corralation between Adventure Box and ALM Equity
Assuming the 90 days trading horizon Adventure Box Technology is expected to under-perform the ALM Equity. In addition to that, Adventure Box is 3.11 times more volatile than ALM Equity AB. It trades about -0.22 of its total potential returns per unit of risk. ALM Equity AB is currently generating about -0.35 per unit of volatility. If you would invest 19,200 in ALM Equity AB on September 3, 2024 and sell it today you would lose (2,300) from holding ALM Equity AB or give up 11.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adventure Box Technology vs. ALM Equity AB
Performance |
| Timeline |
| Adventure Box Technology |
| ALM Equity AB |
Adventure Box and ALM Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adventure Box and ALM Equity
The main advantage of trading using opposite Adventure Box and ALM Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adventure Box 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.| Adventure Box vs. Idogen AB | Adventure Box vs. Clean Motion AB | Adventure Box vs. Arion banki hf | Adventure Box vs. KABE Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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