Correlation Between Alfa Laval and Sonova Holding
Can any of the company-specific risk be diversified away by investing in both Alfa Laval and Sonova Holding 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 Sonova Holding 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 Sonova Holding AG, you can compare the effects of market volatilities on Alfa Laval and Sonova Holding 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 Sonova Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Laval and Sonova Holding.
Diversification Opportunities for Alfa Laval and Sonova Holding
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alfa and Sonova is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Laval AB and Sonova Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonova Holding AG 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 Sonova Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonova Holding AG has no effect on the direction of Alfa Laval i.e., Alfa Laval and Sonova Holding go up and down completely randomly.
Pair Corralation between Alfa Laval and Sonova Holding
Assuming the 90 days horizon Alfa Laval AB is expected to generate 0.75 times more return on investment than Sonova Holding. However, Alfa Laval AB is 1.34 times less risky than Sonova Holding. It trades about -0.09 of its potential returns per unit of risk. Sonova Holding AG is currently generating about -0.1 per unit of risk. If you would invest 4,465 in Alfa Laval AB on August 24, 2024 and sell it today you would lose (157.00) from holding Alfa Laval AB or give up 3.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Laval AB vs. Sonova Holding AG
Performance |
| Timeline |
| Alfa Laval AB |
| Sonova Holding AG |
Alfa Laval and Sonova Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Laval and Sonova Holding
The main advantage of trading using opposite Alfa Laval and Sonova Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Laval position performs unexpectedly, Sonova Holding 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 Sonova Holding will offset losses from the drop in Sonova Holding's long position.| Alfa Laval vs. Aumann AG | Alfa Laval vs. Arista Power | Alfa Laval vs. Atlas Copco AB | Alfa Laval vs. American Commerce Solutions |
| Sonova Holding vs. Armm Inc | Sonova Holding vs. Cellink AB | Sonova Holding vs. Bone Biologics Corp | Sonova Holding vs. BICO 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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