Correlation Between Castellum and Hufvudstaden
Can any of the company-specific risk be diversified away by investing in both Castellum and Hufvudstaden 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 Castellum and Hufvudstaden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Castellum AB and Hufvudstaden AB, you can compare the effects of market volatilities on Castellum and Hufvudstaden 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 Castellum with a short position of Hufvudstaden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castellum and Hufvudstaden.
Diversification Opportunities for Castellum and Hufvudstaden
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Castellum and Hufvudstaden is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Castellum AB and Hufvudstaden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hufvudstaden AB and Castellum 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 Castellum AB are associated (or correlated) with Hufvudstaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hufvudstaden AB has no effect on the direction of Castellum i.e., Castellum and Hufvudstaden go up and down completely randomly.
Pair Corralation between Castellum and Hufvudstaden
Assuming the 90 days trading horizon Castellum is expected to generate 2.0 times less return on investment than Hufvudstaden. In addition to that, Castellum is 1.02 times more volatile than Hufvudstaden AB. It trades about 0.02 of its total potential returns per unit of risk. Hufvudstaden AB is currently generating about 0.05 per unit of volatility. If you would invest 12,170 in Hufvudstaden AB on November 28, 2024 and sell it today you would earn a total of 130.00 from holding Hufvudstaden AB or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Castellum AB vs. Hufvudstaden AB
Performance |
| Timeline |
| Castellum AB |
| Hufvudstaden AB |
Castellum and Hufvudstaden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Castellum and Hufvudstaden
The main advantage of trading using opposite Castellum and Hufvudstaden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castellum position performs unexpectedly, Hufvudstaden 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 Hufvudstaden will offset losses from the drop in Hufvudstaden's long position.| Castellum vs. Fabege AB | Castellum vs. Samhllsbyggnadsbolaget i Norden | Castellum vs. Fastighets AB Balder | Castellum vs. Axfood AB |
| Hufvudstaden vs. Fabege AB | Hufvudstaden vs. Castellum AB | Hufvudstaden vs. Wallenstam AB | Hufvudstaden vs. Fastighets AB Balder |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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