Correlation Between ALM Equity and Acrinova
Can any of the company-specific risk be diversified away by investing in both ALM Equity and Acrinova 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 ALM Equity and Acrinova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALM Equity AB and Acrinova AB Series, you can compare the effects of market volatilities on ALM Equity and Acrinova 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 ALM Equity with a short position of Acrinova. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALM Equity and Acrinova.
Diversification Opportunities for ALM Equity and Acrinova
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ALM and Acrinova is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ALM Equity AB and Acrinova AB Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acrinova AB Series and ALM Equity 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 ALM Equity AB are associated (or correlated) with Acrinova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acrinova AB Series has no effect on the direction of ALM Equity i.e., ALM Equity and Acrinova go up and down completely randomly.
Pair Corralation between ALM Equity and Acrinova
Assuming the 90 days trading horizon ALM Equity AB is expected to under-perform the Acrinova. In addition to that, ALM Equity is 2.3 times more volatile than Acrinova AB Series. It trades about -0.31 of its total potential returns per unit of risk. Acrinova AB Series is currently generating about 0.0 per unit of volatility. If you would invest 918.00 in Acrinova AB Series on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Acrinova AB Series or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALM Equity AB vs. Acrinova AB Series
Performance |
| Timeline |
| ALM Equity AB |
| Acrinova AB Series |
ALM Equity and Acrinova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALM Equity and Acrinova
The main advantage of trading using opposite ALM Equity and Acrinova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALM Equity position performs unexpectedly, Acrinova 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 Acrinova will offset losses from the drop in Acrinova's long position.| ALM Equity vs. ALM Equity AB | ALM Equity vs. Bufab Holding AB | ALM Equity vs. Atrium Ljungberg AB | ALM Equity vs. Bravida Holding AB |
| Acrinova vs. Fabege AB | Acrinova vs. Castellum AB | Acrinova vs. Wallenstam AB | Acrinova vs. Fastighets AB Balder |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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