Correlation Between Alm Brand and Tryg AS
Can any of the company-specific risk be diversified away by investing in both Alm Brand and Tryg AS 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 Tryg AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alm Brand and Tryg AS, you can compare the effects of market volatilities on Alm Brand and Tryg AS 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 Tryg AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alm Brand and Tryg AS.
Diversification Opportunities for Alm Brand and Tryg AS
Very poor diversification
The 3 months correlation between Alm and Tryg is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alm Brand and Tryg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tryg AS 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 Tryg AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tryg AS has no effect on the direction of Alm Brand i.e., Alm Brand and Tryg AS go up and down completely randomly.
Pair Corralation between Alm Brand and Tryg AS
Assuming the 90 days trading horizon Alm Brand is expected to generate 1.28 times more return on investment than Tryg AS. However, Alm Brand is 1.28 times more volatile than Tryg AS. It trades about -0.03 of its potential returns per unit of risk. Tryg AS is currently generating about -0.06 per unit of risk. If you would invest 1,347 in Alm Brand on August 29, 2024 and sell it today you would lose (12.00) from holding Alm Brand or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alm Brand vs. Tryg AS
Performance |
| Timeline |
| Alm Brand |
| Tryg AS |
Alm Brand and Tryg AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alm Brand and Tryg AS
The main advantage of trading using opposite Alm Brand and Tryg AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alm Brand position performs unexpectedly, Tryg AS 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 Tryg AS will offset losses from the drop in Tryg AS's long position.| Alm Brand vs. Dataproces Group AS | Alm Brand vs. cBrain AS | Alm Brand vs. ALK Abell AS | Alm Brand vs. ChemoMetec AS |
| Tryg AS vs. Dataproces Group AS | Tryg AS vs. cBrain AS | Tryg AS vs. ALK Abell AS | Tryg AS vs. ChemoMetec 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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