Correlation Between AVTECH Sweden and Invisio Communications
Can any of the company-specific risk be diversified away by investing in both AVTECH Sweden and Invisio Communications 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 AVTECH Sweden and Invisio Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AVTECH Sweden AB and Invisio Communications AB, you can compare the effects of market volatilities on AVTECH Sweden and Invisio Communications 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 AVTECH Sweden with a short position of Invisio Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of AVTECH Sweden and Invisio Communications.
Diversification Opportunities for AVTECH Sweden and Invisio Communications
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AVTECH and Invisio is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding AVTECH Sweden AB and Invisio Communications AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invisio Communications and AVTECH Sweden 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 AVTECH Sweden AB are associated (or correlated) with Invisio Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invisio Communications has no effect on the direction of AVTECH Sweden i.e., AVTECH Sweden and Invisio Communications go up and down completely randomly.
Pair Corralation between AVTECH Sweden and Invisio Communications
Assuming the 90 days trading horizon AVTECH Sweden AB is expected to generate 1.7 times more return on investment than Invisio Communications. However, AVTECH Sweden is 1.7 times more volatile than Invisio Communications AB. It trades about 0.03 of its potential returns per unit of risk. Invisio Communications AB is currently generating about 0.05 per unit of risk. If you would invest 285.00 in AVTECH Sweden AB on August 25, 2024 and sell it today you would earn a total of 77.00 from holding AVTECH Sweden AB or generate 27.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AVTECH Sweden AB vs. Invisio Communications AB
Performance |
| Timeline |
| AVTECH Sweden AB |
| Invisio Communications |
AVTECH Sweden and Invisio Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AVTECH Sweden and Invisio Communications
The main advantage of trading using opposite AVTECH Sweden and Invisio Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AVTECH Sweden position performs unexpectedly, Invisio Communications 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 Invisio Communications will offset losses from the drop in Invisio Communications' long position.| AVTECH Sweden vs. aXichem AB | AVTECH Sweden vs. Gaming Corps AB | AVTECH Sweden vs. Cantargia AB | AVTECH Sweden vs. KABE Group AB |
| Invisio Communications vs. Addtech AB | Invisio Communications vs. Teqnion AB | Invisio Communications vs. Vitec Software Group | Invisio Communications vs. Lagercrantz 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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