Correlation Between Catella AB and Investment
Can any of the company-specific risk be diversified away by investing in both Catella AB and Investment 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 Catella AB and Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catella AB A and Investment AB Latour, you can compare the effects of market volatilities on Catella AB and Investment 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 Catella AB with a short position of Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catella AB and Investment.
Diversification Opportunities for Catella AB and Investment
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Catella and Investment is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Catella AB A and Investment AB Latour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment AB Latour and Catella 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 Catella AB A are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment AB Latour has no effect on the direction of Catella AB i.e., Catella AB and Investment go up and down completely randomly.
Pair Corralation between Catella AB and Investment
Assuming the 90 days trading horizon Catella AB A is expected to under-perform the Investment. In addition to that, Catella AB is 3.25 times more volatile than Investment AB Latour. It trades about -0.1 of its total potential returns per unit of risk. Investment AB Latour is currently generating about 0.06 per unit of volatility. If you would invest 28,000 in Investment AB Latour on September 13, 2024 and sell it today you would earn a total of 330.00 from holding Investment AB Latour or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catella AB A vs. Investment AB Latour
Performance |
| Timeline |
| Catella AB A |
| Investment AB Latour |
Catella AB and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catella AB and Investment
The main advantage of trading using opposite Catella AB and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catella AB position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment's long position.| Catella AB vs. Catella AB | Catella AB vs. Svolder AB | Catella AB vs. Beijer Alma AB | Catella AB vs. BTS Group AB |
| Investment vs. Catella AB | Investment vs. Catella AB A | Investment vs. KABE Group AB | Investment vs. IAR Systems 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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