Correlation Between Alfa Laval and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Alfa Laval and Nexam Chemical 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 Nexam Chemical 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 Nexam Chemical Holding, you can compare the effects of market volatilities on Alfa Laval and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Laval and Nexam Chemical.
Diversification Opportunities for Alfa Laval and Nexam Chemical
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alfa and Nexam is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Laval AB and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Alfa Laval i.e., Alfa Laval and Nexam Chemical go up and down completely randomly.
Pair Corralation between Alfa Laval and Nexam Chemical
Assuming the 90 days trading horizon Alfa Laval AB is expected to under-perform the Nexam Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Alfa Laval AB is 2.06 times less risky than Nexam Chemical. The stock trades about -0.05 of its potential returns per unit of risk. The Nexam Chemical Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 401.00 in Nexam Chemical Holding on September 3, 2024 and sell it today you would lose (2.00) from holding Nexam Chemical Holding or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Laval AB vs. Nexam Chemical Holding
Performance |
| Timeline |
| Alfa Laval AB |
| Nexam Chemical Holding |
Alfa Laval and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Laval and Nexam Chemical
The main advantage of trading using opposite Alfa Laval and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Laval position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical'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 |
| Nexam Chemical vs. Auriant Mining AB | Nexam Chemical vs. aXichem AB | Nexam Chemical vs. Clean Motion AB | Nexam Chemical vs. KABE Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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