Correlation Between Alm Brand and Scandinavian Investment
Can any of the company-specific risk be diversified away by investing in both Alm Brand and Scandinavian Investment 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 Brand and Scandinavian Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alm Brand and Scandinavian Investment Group, you can compare the effects of market volatilities on Alm Brand and Scandinavian Investment 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 Brand with a short position of Scandinavian Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alm Brand and Scandinavian Investment.
Diversification Opportunities for Alm Brand and Scandinavian Investment
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alm and Scandinavian is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Alm Brand and Scandinavian Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Investment and Alm Brand 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 Brand are associated (or correlated) with Scandinavian Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Investment has no effect on the direction of Alm Brand i.e., Alm Brand and Scandinavian Investment go up and down completely randomly.
Pair Corralation between Alm Brand and Scandinavian Investment
Assuming the 90 days trading horizon Alm Brand is expected to generate 2.12 times less return on investment than Scandinavian Investment. But when comparing it to its historical volatility, Alm Brand is 1.08 times less risky than Scandinavian Investment. It trades about 0.04 of its potential returns per unit of risk. Scandinavian Investment Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 322.00 in Scandinavian Investment Group on August 25, 2024 and sell it today you would earn a total of 6.00 from holding Scandinavian Investment Group or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alm Brand vs. Scandinavian Investment Group
Performance |
| Timeline |
| Alm Brand |
| Scandinavian Investment |
Alm Brand and Scandinavian Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alm Brand and Scandinavian Investment
The main advantage of trading using opposite Alm Brand and Scandinavian Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alm Brand position performs unexpectedly, Scandinavian Investment 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 Scandinavian Investment will offset losses from the drop in Scandinavian Investment's long position.The idea behind Alm Brand and Scandinavian Investment Group 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.| Scandinavian Investment vs. North Media AS | Scandinavian Investment vs. Rovsing AS | Scandinavian Investment vs. Alm Brand | Scandinavian Investment 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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