Correlation Between Alcadon Group and Brilliant Future
Can any of the company-specific risk be diversified away by investing in both Alcadon Group and Brilliant Future 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 Alcadon Group and Brilliant Future into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcadon Group AB and Brilliant Future AB, you can compare the effects of market volatilities on Alcadon Group and Brilliant Future 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 Alcadon Group with a short position of Brilliant Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcadon Group and Brilliant Future.
Diversification Opportunities for Alcadon Group and Brilliant Future
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alcadon and Brilliant is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alcadon Group AB and Brilliant Future AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brilliant Future and Alcadon 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 Alcadon Group AB are associated (or correlated) with Brilliant Future. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brilliant Future has no effect on the direction of Alcadon Group i.e., Alcadon Group and Brilliant Future go up and down completely randomly.
Pair Corralation between Alcadon Group and Brilliant Future
Assuming the 90 days trading horizon Alcadon Group AB is expected to under-perform the Brilliant Future. In addition to that, Alcadon Group is 1.14 times more volatile than Brilliant Future AB. It trades about -0.06 of its total potential returns per unit of risk. Brilliant Future AB is currently generating about -0.02 per unit of volatility. If you would invest 662.00 in Brilliant Future AB on August 27, 2024 and sell it today you would lose (192.00) from holding Brilliant Future AB or give up 29.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcadon Group AB vs. Brilliant Future AB
Performance |
| Timeline |
| Alcadon Group AB |
| Brilliant Future |
Alcadon Group and Brilliant Future Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcadon Group and Brilliant Future
The main advantage of trading using opposite Alcadon Group and Brilliant Future positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcadon Group position performs unexpectedly, Brilliant Future 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 Brilliant Future will offset losses from the drop in Brilliant Future's long position.| Alcadon Group vs. DistIT AB | Alcadon Group vs. Addnode Group AB | Alcadon Group vs. Awardit AB | Alcadon Group vs. Avensia publ AB |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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