Correlation Between Cloetta AB and Drillcon
Can any of the company-specific risk be diversified away by investing in both Cloetta AB and Drillcon 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 Cloetta AB and Drillcon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloetta AB and Drillcon AB, you can compare the effects of market volatilities on Cloetta AB and Drillcon 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 Cloetta AB with a short position of Drillcon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloetta AB and Drillcon.
Diversification Opportunities for Cloetta AB and Drillcon
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cloetta and Drillcon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cloetta AB and Drillcon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drillcon AB and Cloetta 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 Cloetta AB are associated (or correlated) with Drillcon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drillcon AB has no effect on the direction of Cloetta AB i.e., Cloetta AB and Drillcon go up and down completely randomly.
Pair Corralation between Cloetta AB and Drillcon
Assuming the 90 days trading horizon Cloetta AB is expected to generate 0.37 times more return on investment than Drillcon. However, Cloetta AB is 2.72 times less risky than Drillcon. It trades about -0.13 of its potential returns per unit of risk. Drillcon AB is currently generating about -0.13 per unit of risk. If you would invest 2,676 in Cloetta AB on September 1, 2024 and sell it today you would lose (74.00) from holding Cloetta AB or give up 2.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cloetta AB vs. Drillcon AB
Performance |
| Timeline |
| Cloetta AB |
| Drillcon AB |
Cloetta AB and Drillcon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cloetta AB and Drillcon
The main advantage of trading using opposite Cloetta AB and Drillcon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloetta AB position performs unexpectedly, Drillcon 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 Drillcon will offset losses from the drop in Drillcon's long position.| Cloetta AB vs. Securitas AB | Cloetta AB vs. Clas Ohlson AB | Cloetta AB vs. Axfood AB | Cloetta AB vs. Byggmax Group AB |
| Drillcon vs. Holmen AB | Drillcon vs. Svenska Cellulosa Aktiebolaget | Drillcon vs. Husqvarna AB | Drillcon vs. Alfa Laval 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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