Correlation Between ALK Abell and Brd Klee
Can any of the company-specific risk be diversified away by investing in both ALK Abell and Brd Klee 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 ALK Abell and Brd Klee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALK Abell AS and Brd Klee AS, you can compare the effects of market volatilities on ALK Abell and Brd Klee 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 ALK Abell with a short position of Brd Klee. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALK Abell and Brd Klee.
Diversification Opportunities for ALK Abell and Brd Klee
Very weak diversification
The 3 months correlation between ALK and Brd is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ALK Abell AS and Brd Klee AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brd Klee AS and ALK Abell 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 ALK Abell AS are associated (or correlated) with Brd Klee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brd Klee AS has no effect on the direction of ALK Abell i.e., ALK Abell and Brd Klee go up and down completely randomly.
Pair Corralation between ALK Abell and Brd Klee
Assuming the 90 days trading horizon ALK Abell AS is expected to generate 1.17 times more return on investment than Brd Klee. However, ALK Abell is 1.17 times more volatile than Brd Klee AS. It trades about -0.07 of its potential returns per unit of risk. Brd Klee AS is currently generating about -0.1 per unit of risk. If you would invest 17,800 in ALK Abell AS on August 29, 2024 and sell it today you would lose (1,950) from holding ALK Abell AS or give up 10.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
ALK Abell AS vs. Brd Klee AS
Performance |
| Timeline |
| ALK Abell AS |
| Brd Klee AS |
ALK Abell and Brd Klee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALK Abell and Brd Klee
The main advantage of trading using opposite ALK Abell and Brd Klee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALK Abell position performs unexpectedly, Brd Klee 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 Brd Klee will offset losses from the drop in Brd Klee's long position.The idea behind ALK Abell AS and Brd Klee AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Brd Klee vs. RIAS AS | Brd Klee vs. Investeringsselskabet Luxor AS | Brd Klee vs. Glunz Jensen | Brd Klee vs. SKAKO AS |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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