Correlation Between Arctic Gold and Lipum AB
Can any of the company-specific risk be diversified away by investing in both Arctic Gold and Lipum AB 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 Arctic Gold and Lipum AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arctic Gold Publ and Lipum AB, you can compare the effects of market volatilities on Arctic Gold and Lipum AB 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 Arctic Gold with a short position of Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Gold and Lipum AB.
Diversification Opportunities for Arctic Gold and Lipum AB
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Arctic and Lipum is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Gold Publ and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum AB and Arctic Gold 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 Arctic Gold Publ are associated (or correlated) with Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Arctic Gold i.e., Arctic Gold and Lipum AB go up and down completely randomly.
Pair Corralation between Arctic Gold and Lipum AB
Assuming the 90 days trading horizon Arctic Gold is expected to generate 5.32 times less return on investment than Lipum AB. In addition to that, Arctic Gold is 1.21 times more volatile than Lipum AB. It trades about 0.01 of its total potential returns per unit of risk. Lipum AB is currently generating about 0.06 per unit of volatility. If you would invest 870.00 in Lipum AB on August 29, 2024 and sell it today you would earn a total of 790.00 from holding Lipum AB or generate 90.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arctic Gold Publ vs. Lipum AB
Performance |
| Timeline |
| Arctic Gold Publ |
| Lipum AB |
Arctic Gold and Lipum AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arctic Gold and Lipum AB
The main advantage of trading using opposite Arctic Gold and Lipum AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Gold position performs unexpectedly, Lipum AB 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 Lipum AB will offset losses from the drop in Lipum AB's long position.| Arctic Gold vs. Bjorn Borg AB | Arctic Gold vs. Diadrom Holding AB | Arctic Gold vs. Anoto Group AB | Arctic Gold vs. Cloetta AB |
| Lipum AB vs. Ascelia Pharma AB | Lipum AB vs. NextCell Pharma AB | Lipum AB vs. Annexin Pharmaceuticals AB | Lipum AB vs. AlzeCure Pharma |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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