Correlation Between Catella AB and DistIT AB
Can any of the company-specific risk be diversified away by investing in both Catella AB and DistIT AB 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 DistIT AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catella AB and DistIT AB, you can compare the effects of market volatilities on Catella AB and DistIT AB 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 DistIT AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catella AB and DistIT AB.
Diversification Opportunities for Catella AB and DistIT AB
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Catella and DistIT is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Catella AB and DistIT AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DistIT AB 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 are associated (or correlated) with DistIT AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DistIT AB has no effect on the direction of Catella AB i.e., Catella AB and DistIT AB go up and down completely randomly.
Pair Corralation between Catella AB and DistIT AB
Assuming the 90 days trading horizon Catella AB is expected to generate 0.27 times more return on investment than DistIT AB. However, Catella AB is 3.71 times less risky than DistIT AB. It trades about -0.34 of its potential returns per unit of risk. DistIT AB is currently generating about -0.12 per unit of risk. If you would invest 2,870 in Catella AB on September 13, 2024 and sell it today you would lose (260.00) from holding Catella AB or give up 9.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catella AB vs. DistIT AB
Performance |
| Timeline |
| Catella AB |
| DistIT AB |
Catella AB and DistIT AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catella AB and DistIT AB
The main advantage of trading using opposite Catella AB and DistIT AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catella AB position performs unexpectedly, DistIT AB 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 DistIT AB will offset losses from the drop in DistIT AB's long position.| Catella AB vs. Clas Ohlson AB | Catella AB vs. New Wave Group | Catella AB vs. Bilia AB | Catella AB vs. Inwido AB |
| DistIT AB vs. Alcadon Group AB | DistIT AB vs. IAR Systems Group | DistIT AB vs. Dustin Group AB | DistIT AB vs. Generic Sweden publ |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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