Correlation Between Axfood AB and Rottneros
Can any of the company-specific risk be diversified away by investing in both Axfood AB and Rottneros 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 Rottneros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Rottneros AB, you can compare the effects of market volatilities on Axfood AB and Rottneros 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 Rottneros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Rottneros.
Diversification Opportunities for Axfood AB and Rottneros
Poor diversification
The 3 months correlation between Axfood and Rottneros is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Rottneros AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rottneros AB 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 Rottneros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rottneros AB has no effect on the direction of Axfood AB i.e., Axfood AB and Rottneros go up and down completely randomly.
Pair Corralation between Axfood AB and Rottneros
Assuming the 90 days trading horizon Axfood AB is expected to generate 0.67 times more return on investment than Rottneros. However, Axfood AB is 1.49 times less risky than Rottneros. It trades about 0.01 of its potential returns per unit of risk. Rottneros AB is currently generating about -0.03 per unit of risk. If you would invest 23,322 in Axfood AB on October 25, 2024 and sell it today you would lose (92.00) from holding Axfood AB or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axfood AB vs. Rottneros AB
Performance |
| Timeline |
| Axfood AB |
| Rottneros AB |
Axfood AB and Rottneros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Rottneros
The main advantage of trading using opposite Axfood AB and Rottneros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, Rottneros 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 Rottneros will offset losses from the drop in Rottneros' long position.| Axfood AB vs. Castellum AB | Axfood AB vs. Investor AB ser | Axfood AB vs. Kinnevik Investment AB | Axfood AB vs. Avanza Bank Holding |
| Rottneros vs. BillerudKorsnas AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Axfood AB | Rottneros vs. Proact IT Group |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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