Correlation Between Avanza Bank and Arctic Paper
Can any of the company-specific risk be diversified away by investing in both Avanza Bank and Arctic Paper 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 Avanza Bank and Arctic Paper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanza Bank Holding and Arctic Paper SA, you can compare the effects of market volatilities on Avanza Bank and Arctic Paper 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 Avanza Bank with a short position of Arctic Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanza Bank and Arctic Paper.
Diversification Opportunities for Avanza Bank and Arctic Paper
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Avanza and Arctic is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Avanza Bank Holding and Arctic Paper SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Paper SA and Avanza Bank 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 Avanza Bank Holding are associated (or correlated) with Arctic Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Paper SA has no effect on the direction of Avanza Bank i.e., Avanza Bank and Arctic Paper go up and down completely randomly.
Pair Corralation between Avanza Bank and Arctic Paper
Assuming the 90 days trading horizon Avanza Bank Holding is expected to generate 0.87 times more return on investment than Arctic Paper. However, Avanza Bank Holding is 1.15 times less risky than Arctic Paper. It trades about 0.44 of its potential returns per unit of risk. Arctic Paper SA is currently generating about 0.03 per unit of risk. If you would invest 22,730 in Avanza Bank Holding on September 12, 2024 and sell it today you would earn a total of 3,820 from holding Avanza Bank Holding or generate 16.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avanza Bank Holding vs. Arctic Paper SA
Performance |
| Timeline |
| Avanza Bank Holding |
| Arctic Paper SA |
Avanza Bank and Arctic Paper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanza Bank and Arctic Paper
The main advantage of trading using opposite Avanza Bank and Arctic Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanza Bank position performs unexpectedly, Arctic Paper 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 Arctic Paper will offset losses from the drop in Arctic Paper's long position.| Avanza Bank vs. Axfood AB | Avanza Bank vs. Samhllsbyggnadsbolaget i Norden | Avanza Bank vs. Castellum AB | Avanza Bank vs. Investor AB ser |
| Arctic Paper vs. Catena Media plc | Arctic Paper vs. USWE Sports AB | Arctic Paper vs. Online Brands Nordic | Arctic Paper vs. Viva Wine 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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