Correlation Between Alandsbanken Abp and Exel Composites
Can any of the company-specific risk be diversified away by investing in both Alandsbanken Abp and Exel Composites 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 Alandsbanken Abp and Exel Composites into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alandsbanken Abp B and Exel Composites Oyj, you can compare the effects of market volatilities on Alandsbanken Abp and Exel Composites 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 Alandsbanken Abp with a short position of Exel Composites. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alandsbanken Abp and Exel Composites.
Diversification Opportunities for Alandsbanken Abp and Exel Composites
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alandsbanken and Exel is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alandsbanken Abp B and Exel Composites Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exel Composites Oyj and Alandsbanken Abp 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 Alandsbanken Abp B are associated (or correlated) with Exel Composites. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exel Composites Oyj has no effect on the direction of Alandsbanken Abp i.e., Alandsbanken Abp and Exel Composites go up and down completely randomly.
Pair Corralation between Alandsbanken Abp and Exel Composites
Assuming the 90 days trading horizon Alandsbanken Abp B is expected to generate 0.27 times more return on investment than Exel Composites. However, Alandsbanken Abp B is 3.72 times less risky than Exel Composites. It trades about -0.1 of its potential returns per unit of risk. Exel Composites Oyj is currently generating about -0.45 per unit of risk. If you would invest 3,400 in Alandsbanken Abp B on August 27, 2024 and sell it today you would lose (50.00) from holding Alandsbanken Abp B or give up 1.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alandsbanken Abp B vs. Exel Composites Oyj
Performance |
| Timeline |
| Alandsbanken Abp B |
| Exel Composites Oyj |
Alandsbanken Abp and Exel Composites Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alandsbanken Abp and Exel Composites
The main advantage of trading using opposite Alandsbanken Abp and Exel Composites positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alandsbanken Abp position performs unexpectedly, Exel Composites 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 Exel Composites will offset losses from the drop in Exel Composites' long position.| Alandsbanken Abp vs. Nordea Bank Abp | Alandsbanken Abp vs. Fortum Oyj | Alandsbanken Abp vs. UPM Kymmene Oyj | Alandsbanken Abp vs. Neste Oil Oyj |
| Exel Composites vs. Aktia Bank Abp | Exel Composites vs. Alandsbanken Abp B | Exel Composites vs. Alandsbanken Abp A | Exel Composites vs. Sampo Oyj A |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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