Correlation Between ASSA ABLOY and LIBERTY DEFENSE
Can any of the company-specific risk be diversified away by investing in both ASSA ABLOY and LIBERTY DEFENSE 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 ASSA ABLOY and LIBERTY DEFENSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASSA ABLOY AB and LIBERTY DEFENSE H, you can compare the effects of market volatilities on ASSA ABLOY and LIBERTY DEFENSE 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 ASSA ABLOY with a short position of LIBERTY DEFENSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSA ABLOY and LIBERTY DEFENSE.
Diversification Opportunities for ASSA ABLOY and LIBERTY DEFENSE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ASSA and LIBERTY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and LIBERTY DEFENSE H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIBERTY DEFENSE H and ASSA ABLOY 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 ASSA ABLOY AB are associated (or correlated) with LIBERTY DEFENSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIBERTY DEFENSE H has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and LIBERTY DEFENSE go up and down completely randomly.
Pair Corralation between ASSA ABLOY and LIBERTY DEFENSE
Assuming the 90 days trading horizon ASSA ABLOY is expected to generate 78.41 times less return on investment than LIBERTY DEFENSE. But when comparing it to its historical volatility, ASSA ABLOY AB is 12.2 times less risky than LIBERTY DEFENSE. It trades about 0.02 of its potential returns per unit of risk. LIBERTY DEFENSE H is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 30.00 in LIBERTY DEFENSE H on October 15, 2024 and sell it today you would earn a total of 26.00 from holding LIBERTY DEFENSE H or generate 86.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
ASSA ABLOY AB vs. LIBERTY DEFENSE H
Performance |
| Timeline |
| ASSA ABLOY AB |
| LIBERTY DEFENSE H |
ASSA ABLOY and LIBERTY DEFENSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASSA ABLOY and LIBERTY DEFENSE
The main advantage of trading using opposite ASSA ABLOY and LIBERTY DEFENSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSA ABLOY position performs unexpectedly, LIBERTY DEFENSE 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 LIBERTY DEFENSE will offset losses from the drop in LIBERTY DEFENSE's long position.| ASSA ABLOY vs. SIDETRADE EO 1 | ASSA ABLOY vs. Tencent Music Entertainment | ASSA ABLOY vs. KENEDIX OFFICE INV | ASSA ABLOY vs. Zoom Video Communications |
| LIBERTY DEFENSE vs. ASSA ABLOY AB | LIBERTY DEFENSE vs. Halma plc | LIBERTY DEFENSE vs. Allegion plc | LIBERTY DEFENSE vs. Superior Plus Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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