Correlation Between ALM Equity and New Wave
Can any of the company-specific risk be diversified away by investing in both ALM Equity and New Wave 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 New Wave 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 New Wave Group, you can compare the effects of market volatilities on ALM Equity and New Wave 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 New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALM Equity and New Wave.
Diversification Opportunities for ALM Equity and New Wave
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between ALM and New is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ALM Equity AB and New Wave Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Group 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 New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Group has no effect on the direction of ALM Equity i.e., ALM Equity and New Wave go up and down completely randomly.
Pair Corralation between ALM Equity and New Wave
If you would invest 9,198 in New Wave Group on November 3, 2024 and sell it today you would earn a total of 1,402 from holding New Wave Group or generate 15.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.41% |
| Values | Daily Returns |
ALM Equity AB vs. New Wave Group
Performance |
| Timeline |
| ALM Equity AB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| New Wave Group |
ALM Equity and New Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALM Equity and New Wave
The main advantage of trading using opposite ALM Equity and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALM Equity position performs unexpectedly, New Wave 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 New Wave will offset losses from the drop in New Wave'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 |
| New Wave vs. Hexatronic Group AB | New Wave vs. Inwido AB | New Wave vs. Lindab International AB | New Wave vs. Byggmax 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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