Correlation Between CirChem AB and Alleima AB
Can any of the company-specific risk be diversified away by investing in both CirChem AB and Alleima 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 CirChem AB and Alleima AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CirChem AB and Alleima AB, you can compare the effects of market volatilities on CirChem AB and Alleima 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 CirChem AB with a short position of Alleima AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CirChem AB and Alleima AB.
Diversification Opportunities for CirChem AB and Alleima AB
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CirChem and Alleima is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CirChem AB and Alleima AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alleima AB and CirChem 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 CirChem AB are associated (or correlated) with Alleima AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alleima AB has no effect on the direction of CirChem AB i.e., CirChem AB and Alleima AB go up and down completely randomly.
Pair Corralation between CirChem AB and Alleima AB
Assuming the 90 days trading horizon CirChem AB is expected to generate 1.95 times more return on investment than Alleima AB. However, CirChem AB is 1.95 times more volatile than Alleima AB. It trades about 0.18 of its potential returns per unit of risk. Alleima AB is currently generating about 0.22 per unit of risk. If you would invest 286.00 in CirChem AB on October 26, 2024 and sell it today you would earn a total of 66.00 from holding CirChem AB or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CirChem AB vs. Alleima AB
Performance |
| Timeline |
| CirChem AB |
| Alleima AB |
CirChem AB and Alleima AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CirChem AB and Alleima AB
The main advantage of trading using opposite CirChem AB and Alleima AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CirChem AB position performs unexpectedly, Alleima 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 Alleima AB will offset losses from the drop in Alleima AB's long position.| CirChem AB vs. Munters Group AB | CirChem AB vs. Qleanair Holding AB | CirChem AB vs. Bawat Water Technologies |
| Alleima AB vs. Sandvik AB | Alleima AB vs. AB SKF | Alleima AB vs. Svenska Handelsbanken AB | Alleima AB vs. Essity AB |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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