Correlation Between ALK Abell and PFA Invest
Can any of the company-specific risk be diversified away by investing in both ALK Abell and PFA Invest 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 PFA Invest 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 PFA Invest Kreditobligationer, you can compare the effects of market volatilities on ALK Abell and PFA Invest 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 PFA Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALK Abell and PFA Invest.
Diversification Opportunities for ALK Abell and PFA Invest
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ALK and PFA is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ALK Abell AS and PFA Invest Kreditobligationer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFA Invest Kreditobl 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 PFA Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFA Invest Kreditobl has no effect on the direction of ALK Abell i.e., ALK Abell and PFA Invest go up and down completely randomly.
Pair Corralation between ALK Abell and PFA Invest
Assuming the 90 days trading horizon ALK Abell AS is expected to generate 10.85 times more return on investment than PFA Invest. However, ALK Abell is 10.85 times more volatile than PFA Invest Kreditobligationer. It trades about 0.04 of its potential returns per unit of risk. PFA Invest Kreditobligationer is currently generating about 0.09 per unit of risk. If you would invest 10,650 in ALK Abell AS on October 30, 2024 and sell it today you would earn a total of 4,870 from holding ALK Abell AS or generate 45.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALK Abell AS vs. PFA Invest Kreditobligationer
Performance |
| Timeline |
| ALK Abell AS |
| PFA Invest Kreditobl |
ALK Abell and PFA Invest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALK Abell and PFA Invest
The main advantage of trading using opposite ALK Abell and PFA Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALK Abell position performs unexpectedly, PFA Invest 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 PFA Invest will offset losses from the drop in PFA Invest's long position.The idea behind ALK Abell AS and PFA Invest Kreditobligationer 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.| PFA Invest vs. Netcompany Group AS | PFA Invest vs. cBrain AS | PFA Invest vs. ALK Abell AS | PFA Invest vs. Green Hydrogen Systems |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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