Correlation Between ANT and Studsvik
Can any of the company-specific risk be diversified away by investing in both ANT and Studsvik 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 ANT and Studsvik into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANT and Studsvik AB, you can compare the effects of market volatilities on ANT and Studsvik 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 ANT with a short position of Studsvik. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANT and Studsvik.
Diversification Opportunities for ANT and Studsvik
Very weak diversification
The 3 months correlation between ANT and Studsvik is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ANT and Studsvik AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Studsvik AB and ANT 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 ANT are associated (or correlated) with Studsvik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Studsvik AB has no effect on the direction of ANT i.e., ANT and Studsvik go up and down completely randomly.
Pair Corralation between ANT and Studsvik
Assuming the 90 days trading horizon ANT is expected to generate 14.73 times more return on investment than Studsvik. However, ANT is 14.73 times more volatile than Studsvik AB. It trades about 0.06 of its potential returns per unit of risk. Studsvik AB is currently generating about 0.03 per unit of risk. If you would invest 145.00 in ANT on October 10, 2024 and sell it today you would earn a total of 2.00 from holding ANT or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
ANT vs. Studsvik AB
Performance |
| Timeline |
| ANT |
| Studsvik AB |
ANT and Studsvik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANT and Studsvik
The main advantage of trading using opposite ANT and Studsvik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANT position performs unexpectedly, Studsvik 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 Studsvik will offset losses from the drop in Studsvik's long position.The idea behind ANT and Studsvik AB 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.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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