Correlation Between Axfood AB and AB Electrolux
Can any of the company-specific risk be diversified away by investing in both Axfood AB and AB Electrolux 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 Axfood AB and AB Electrolux into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and AB Electrolux, you can compare the effects of market volatilities on Axfood AB and AB Electrolux 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 Axfood AB with a short position of AB Electrolux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and AB Electrolux.
Diversification Opportunities for Axfood AB and AB Electrolux
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Axfood and ELUX-B is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and AB Electrolux in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Electrolux and Axfood AB 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 Axfood AB are associated (or correlated) with AB Electrolux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Electrolux has no effect on the direction of Axfood AB i.e., Axfood AB and AB Electrolux go up and down completely randomly.
Pair Corralation between Axfood AB and AB Electrolux
Assuming the 90 days trading horizon Axfood AB is expected to generate 0.67 times more return on investment than AB Electrolux. However, Axfood AB is 1.49 times less risky than AB Electrolux. It trades about -0.06 of its potential returns per unit of risk. AB Electrolux is currently generating about -0.25 per unit of risk. If you would invest 24,020 in Axfood AB on August 29, 2024 and sell it today you would lose (480.00) from holding Axfood AB or give up 2.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Axfood AB vs. AB Electrolux
Performance |
Timeline |
Axfood AB |
AB Electrolux |
Axfood AB and AB Electrolux Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Axfood AB and AB Electrolux
The main advantage of trading using opposite Axfood AB and AB Electrolux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, AB Electrolux 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 AB Electrolux will offset losses from the drop in AB Electrolux's long position.Axfood AB vs. Castellum AB | Axfood AB vs. Tele2 AB | Axfood AB vs. Investor AB ser | Axfood AB vs. Kinnevik Investment AB |
AB Electrolux vs. Precise Biometrics AB | AB Electrolux vs. Anoto Group AB | AB Electrolux vs. Bong AB | AB Electrolux vs. Episurf Medical 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Transaction History View history of all your transactions and understand their impact on performance | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |