Correlation Between Avensia Publ and 4C Group
Can any of the company-specific risk be diversified away by investing in both Avensia Publ and 4C Group 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 Avensia Publ and 4C Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avensia publ AB and 4C Group AB, you can compare the effects of market volatilities on Avensia Publ and 4C Group 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 Avensia Publ with a short position of 4C Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avensia Publ and 4C Group.
Diversification Opportunities for Avensia Publ and 4C Group
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avensia and 4C Group is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Avensia publ AB and 4C Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4C Group AB and Avensia Publ 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 Avensia publ AB are associated (or correlated) with 4C Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4C Group AB has no effect on the direction of Avensia Publ i.e., Avensia Publ and 4C Group go up and down completely randomly.
Pair Corralation between Avensia Publ and 4C Group
Assuming the 90 days trading horizon Avensia publ AB is expected to generate 0.73 times more return on investment than 4C Group. However, Avensia publ AB is 1.37 times less risky than 4C Group. It trades about -0.02 of its potential returns per unit of risk. 4C Group AB is currently generating about -0.05 per unit of risk. If you would invest 1,285 in Avensia publ AB on September 24, 2024 and sell it today you would lose (479.00) from holding Avensia publ AB or give up 37.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avensia publ AB vs. 4C Group AB
Performance |
| Timeline |
| Avensia publ AB |
| 4C Group AB |
Avensia Publ and 4C Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avensia Publ and 4C Group
The main advantage of trading using opposite Avensia Publ and 4C Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avensia Publ position performs unexpectedly, 4C Group 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 4C Group will offset losses from the drop in 4C Group's long position.| Avensia Publ vs. FormPipe Software AB | Avensia Publ vs. Micro Systemation AB | Avensia Publ vs. CTT Systems AB | Avensia Publ vs. CAG Group AB |
| 4C Group vs. B3 Consulting Group | 4C Group vs. Sleep Cycle AB | 4C Group vs. Avensia publ AB | 4C Group vs. CAG Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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