Correlation Between ASSA ABLOY and Nederman Holding

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Can any of the company-specific risk be diversified away by investing in both ASSA ABLOY and Nederman Holding 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 Nederman Holding 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 Nederman Holding AB, you can compare the effects of market volatilities on ASSA ABLOY and Nederman Holding 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 Nederman Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSA ABLOY and Nederman Holding.

Diversification Opportunities for ASSA ABLOY and Nederman Holding

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between ASSA and Nederman is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and Nederman Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nederman Holding 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 Nederman Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nederman Holding has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and Nederman Holding go up and down completely randomly.

Pair Corralation between ASSA ABLOY and Nederman Holding

Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.47 times more return on investment than Nederman Holding. However, ASSA ABLOY AB is 2.11 times less risky than Nederman Holding. It trades about 0.09 of its potential returns per unit of risk. Nederman Holding AB is currently generating about -0.01 per unit of risk. If you would invest  33,312  in ASSA ABLOY AB on September 5, 2024 and sell it today you would earn a total of  1,318  from holding ASSA ABLOY AB or generate 3.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

ASSA ABLOY AB  vs.  Nederman Holding AB

 Performance 
       Timeline  
ASSA ABLOY AB 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ASSA ABLOY AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASSA ABLOY may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Nederman Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nederman Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nederman Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ASSA ABLOY and Nederman Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ASSA ABLOY and Nederman Holding

The main advantage of trading using opposite ASSA ABLOY and Nederman Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSA ABLOY position performs unexpectedly, Nederman Holding 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 Nederman Holding will offset losses from the drop in Nederman Holding's long position.
The idea behind ASSA ABLOY AB and Nederman Holding 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.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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