Correlation Between Alfa Laval and Getinge AB
Can any of the company-specific risk be diversified away by investing in both Alfa Laval and Getinge 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 Alfa Laval and Getinge AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Laval AB and Getinge AB ser, you can compare the effects of market volatilities on Alfa Laval and Getinge 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 Alfa Laval with a short position of Getinge AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Laval and Getinge AB.
Diversification Opportunities for Alfa Laval and Getinge AB
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alfa and Getinge is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Laval AB and Getinge AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getinge AB ser and Alfa Laval 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 Alfa Laval AB are associated (or correlated) with Getinge AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getinge AB ser has no effect on the direction of Alfa Laval i.e., Alfa Laval and Getinge AB go up and down completely randomly.
Pair Corralation between Alfa Laval and Getinge AB
Assuming the 90 days trading horizon Alfa Laval AB is expected to generate 0.62 times more return on investment than Getinge AB. However, Alfa Laval AB is 1.6 times less risky than Getinge AB. It trades about 0.1 of its potential returns per unit of risk. Getinge AB ser is currently generating about 0.04 per unit of risk. If you would invest 36,830 in Alfa Laval AB on November 3, 2024 and sell it today you would earn a total of 12,740 from holding Alfa Laval AB or generate 34.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Laval AB vs. Getinge AB ser
Performance |
| Timeline |
| Alfa Laval AB |
| Getinge AB ser |
Alfa Laval and Getinge AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Laval and Getinge AB
The main advantage of trading using opposite Alfa Laval and Getinge AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Laval position performs unexpectedly, Getinge 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 Getinge AB will offset losses from the drop in Getinge AB's long position.| Alfa Laval vs. Sandvik AB | Alfa Laval vs. AB SKF | Alfa Laval vs. ASSA ABLOY AB | Alfa Laval vs. Atlas Copco 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |