Correlation Between Afarak Group and Dovre Group
Can any of the company-specific risk be diversified away by investing in both Afarak Group and Dovre 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 Afarak Group and Dovre Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afarak Group Oyj and Dovre Group Plc, you can compare the effects of market volatilities on Afarak Group and Dovre 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 Afarak Group with a short position of Dovre Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afarak Group and Dovre Group.
Diversification Opportunities for Afarak Group and Dovre Group
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Afarak and Dovre is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Afarak Group Oyj and Dovre Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dovre Group Plc and Afarak 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 Afarak Group Oyj are associated (or correlated) with Dovre Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dovre Group Plc has no effect on the direction of Afarak Group i.e., Afarak Group and Dovre Group go up and down completely randomly.
Pair Corralation between Afarak Group and Dovre Group
Assuming the 90 days trading horizon Afarak Group Oyj is expected to under-perform the Dovre Group. In addition to that, Afarak Group is 1.09 times more volatile than Dovre Group Plc. It trades about -0.05 of its total potential returns per unit of risk. Dovre Group Plc is currently generating about -0.02 per unit of volatility. If you would invest 46.00 in Dovre Group Plc on September 3, 2024 and sell it today you would lose (11.00) from holding Dovre Group Plc or give up 23.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Afarak Group Oyj vs. Dovre Group Plc
Performance |
| Timeline |
| Afarak Group Oyj |
| Dovre Group Plc |
Afarak Group and Dovre Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afarak Group and Dovre Group
The main advantage of trading using opposite Afarak Group and Dovre Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afarak Group position performs unexpectedly, Dovre 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 Dovre Group will offset losses from the drop in Dovre Group's long position.| Afarak Group vs. Outokumpu Oyj | Afarak Group vs. Sotkamo Silver AB | Afarak Group vs. SSAB AB ser | Afarak Group vs. Bittium Oyj |
| Dovre Group vs. Telefonaktiebolaget LM Ericsson | Dovre Group vs. Telia Company AB | Dovre Group vs. SSAB AB ser | Dovre Group vs. SSAB AB ser |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |