Correlation Between Anoto Group and Rottneros
Can any of the company-specific risk be diversified away by investing in both Anoto Group and Rottneros 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 Anoto Group and Rottneros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anoto Group AB and Rottneros AB, you can compare the effects of market volatilities on Anoto Group and Rottneros 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 Anoto Group with a short position of Rottneros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anoto Group and Rottneros.
Diversification Opportunities for Anoto Group and Rottneros
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Anoto and Rottneros is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Anoto Group AB and Rottneros AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rottneros AB and Anoto Group 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 Anoto Group AB are associated (or correlated) with Rottneros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rottneros AB has no effect on the direction of Anoto Group i.e., Anoto Group and Rottneros go up and down completely randomly.
Pair Corralation between Anoto Group and Rottneros
Assuming the 90 days trading horizon Anoto Group AB is expected to generate 6.7 times more return on investment than Rottneros. However, Anoto Group is 6.7 times more volatile than Rottneros AB. It trades about 0.02 of its potential returns per unit of risk. Rottneros AB is currently generating about -0.15 per unit of risk. If you would invest 16.00 in Anoto Group AB on September 1, 2024 and sell it today you would lose (4.00) from holding Anoto Group AB or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anoto Group AB vs. Rottneros AB
Performance |
| Timeline |
| Anoto Group AB |
| Rottneros AB |
Anoto Group and Rottneros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anoto Group and Rottneros
The main advantage of trading using opposite Anoto Group and Rottneros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anoto Group position performs unexpectedly, Rottneros 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 Rottneros will offset losses from the drop in Rottneros' long position.| Anoto Group vs. Precise Biometrics AB | Anoto Group vs. Fingerprint Cards AB | Anoto Group vs. BioInvent International AB | Anoto Group vs. Bong AB |
| Rottneros vs. Holmen AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Husqvarna AB | Rottneros vs. Alfa Laval 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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