Correlation Between ASSA ABLOY and NIBE Industrier
Can any of the company-specific risk be diversified away by investing in both ASSA ABLOY and NIBE Industrier 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 NIBE Industrier 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 NIBE Industrier AB, you can compare the effects of market volatilities on ASSA ABLOY and NIBE Industrier 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 NIBE Industrier. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSA ABLOY and NIBE Industrier.
Diversification Opportunities for ASSA ABLOY and NIBE Industrier
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASSA and NIBE is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and NIBE Industrier AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIBE Industrier AB 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 NIBE Industrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIBE Industrier AB has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and NIBE Industrier go up and down completely randomly.
Pair Corralation between ASSA ABLOY and NIBE Industrier
Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.37 times more return on investment than NIBE Industrier. However, ASSA ABLOY AB is 2.7 times less risky than NIBE Industrier. It trades about -0.11 of its potential returns per unit of risk. NIBE Industrier AB is currently generating about -0.15 per unit of risk. If you would invest 33,887 in ASSA ABLOY AB on August 29, 2024 and sell it today you would lose (1,117) from holding ASSA ABLOY AB or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASSA ABLOY AB vs. NIBE Industrier AB
Performance |
| Timeline |
| ASSA ABLOY AB |
| NIBE Industrier AB |
ASSA ABLOY and NIBE Industrier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASSA ABLOY and NIBE Industrier
The main advantage of trading using opposite ASSA ABLOY and NIBE Industrier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSA ABLOY position performs unexpectedly, NIBE Industrier 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 NIBE Industrier will offset losses from the drop in NIBE Industrier's long position.| ASSA ABLOY vs. Atlas Copco AB | ASSA ABLOY vs. Sandvik AB | ASSA ABLOY vs. Alfa Laval AB | ASSA ABLOY vs. AB SKF |
| NIBE Industrier vs. Hexagon AB | NIBE Industrier vs. Investor AB ser | NIBE Industrier vs. Investment AB Latour | NIBE Industrier vs. ASSA ABLOY 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |