Correlation Between Catena AB and Duni AB
Can any of the company-specific risk be diversified away by investing in both Catena AB and Duni 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 Catena AB and Duni AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catena AB and Duni AB, you can compare the effects of market volatilities on Catena AB and Duni 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 Catena AB with a short position of Duni AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catena AB and Duni AB.
Diversification Opportunities for Catena AB and Duni AB
Very poor diversification
The 3 months correlation between Catena and Duni is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Catena AB and Duni AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duni AB and Catena 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 Catena AB are associated (or correlated) with Duni AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duni AB has no effect on the direction of Catena AB i.e., Catena AB and Duni AB go up and down completely randomly.
Pair Corralation between Catena AB and Duni AB
Assuming the 90 days trading horizon Catena AB is expected to generate 1.23 times more return on investment than Duni AB. However, Catena AB is 1.23 times more volatile than Duni AB. It trades about 0.04 of its potential returns per unit of risk. Duni AB is currently generating about 0.0 per unit of risk. If you would invest 39,960 in Catena AB on August 31, 2024 and sell it today you would earn a total of 8,740 from holding Catena AB or generate 21.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Catena AB vs. Duni AB
Performance |
| Timeline |
| Catena AB |
| Duni AB |
Catena AB and Duni AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catena AB and Duni AB
The main advantage of trading using opposite Catena AB and Duni AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catena AB position performs unexpectedly, Duni 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 Duni AB will offset losses from the drop in Duni AB's long position.| Catena AB vs. Fastighets AB Balder | Catena AB vs. Fabege AB | Catena AB vs. Wihlborgs Fastigheter AB | Catena AB vs. AB Sagax |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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