Correlation Between Alcadon Group and Bulten AB
Can any of the company-specific risk be diversified away by investing in both Alcadon Group and Bulten AB 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 Bulten AB 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 Bulten AB, you can compare the effects of market volatilities on Alcadon Group and Bulten AB 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 Bulten AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcadon Group and Bulten AB.
Diversification Opportunities for Alcadon Group and Bulten AB
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alcadon and Bulten is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alcadon Group AB and Bulten AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bulten AB 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 Bulten AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bulten AB has no effect on the direction of Alcadon Group i.e., Alcadon Group and Bulten AB go up and down completely randomly.
Pair Corralation between Alcadon Group and Bulten AB
Assuming the 90 days trading horizon Alcadon Group AB is expected to under-perform the Bulten AB. In addition to that, Alcadon Group is 1.14 times more volatile than Bulten AB. It trades about -0.2 of its total potential returns per unit of risk. Bulten AB is currently generating about -0.08 per unit of volatility. If you would invest 6,980 in Bulten AB on August 29, 2024 and sell it today you would lose (260.00) from holding Bulten AB or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcadon Group AB vs. Bulten AB
Performance |
| Timeline |
| Alcadon Group AB |
| Bulten AB |
Alcadon Group and Bulten AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcadon Group and Bulten AB
The main advantage of trading using opposite Alcadon Group and Bulten AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcadon Group position performs unexpectedly, Bulten AB 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 Bulten AB will offset losses from the drop in Bulten AB's long position.| Alcadon Group vs. New Wave Group | Alcadon Group vs. Cantargia AB | Alcadon Group vs. Enea AB | Alcadon Group vs. Proact IT Group |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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