Correlation Between Axfood AB and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both Axfood AB and Plastic Omnium 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 Plastic Omnium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Plastic Omnium, you can compare the effects of market volatilities on Axfood AB and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Plastic Omnium.
Diversification Opportunities for Axfood AB and Plastic Omnium
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Axfood and Plastic is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of Axfood AB i.e., Axfood AB and Plastic Omnium go up and down completely randomly.
Pair Corralation between Axfood AB and Plastic Omnium
Assuming the 90 days trading horizon Axfood AB is expected to generate 1.01 times less return on investment than Plastic Omnium. But when comparing it to its historical volatility, Axfood AB is 1.58 times less risky than Plastic Omnium. It trades about 0.08 of its potential returns per unit of risk. Plastic Omnium is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,059 in Plastic Omnium on November 7, 2024 and sell it today you would earn a total of 23.00 from holding Plastic Omnium or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axfood AB vs. Plastic Omnium
Performance |
| Timeline |
| Axfood AB |
| Plastic Omnium |
Axfood AB and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Plastic Omnium
The main advantage of trading using opposite Axfood AB and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| Axfood AB vs. CarsalesCom | Axfood AB vs. ALERION CLEANPOWER | Axfood AB vs. Tradeweb Markets | Axfood AB vs. SIDETRADE EO 1 |
| Plastic Omnium vs. BOSTON BEER A | Plastic Omnium vs. CVR Medical Corp | Plastic Omnium vs. United Breweries Co | Plastic Omnium vs. Japan Medical Dynamic |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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