Correlation Between Cloetta AB and Peab AB
Can any of the company-specific risk be diversified away by investing in both Cloetta AB and Peab 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 Cloetta AB and Peab AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloetta AB and Peab AB, you can compare the effects of market volatilities on Cloetta AB and Peab 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 Cloetta AB with a short position of Peab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloetta AB and Peab AB.
Diversification Opportunities for Cloetta AB and Peab AB
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cloetta and Peab is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cloetta AB and Peab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peab 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 Peab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peab AB has no effect on the direction of Cloetta AB i.e., Cloetta AB and Peab AB go up and down completely randomly.
Pair Corralation between Cloetta AB and Peab AB
Assuming the 90 days trading horizon Cloetta AB is expected to generate 1.48 times less return on investment than Peab AB. But when comparing it to its historical volatility, Cloetta AB is 1.54 times less risky than Peab AB. It trades about 0.06 of its potential returns per unit of risk. Peab AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,132 in Peab AB on November 27, 2024 and sell it today you would earn a total of 2,978 from holding Peab AB or generate 58.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cloetta AB vs. Peab AB
Performance |
| Timeline |
| Cloetta AB |
| Peab AB |
Cloetta AB and Peab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cloetta AB and Peab AB
The main advantage of trading using opposite Cloetta AB and Peab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloetta AB position performs unexpectedly, Peab 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 Peab AB will offset losses from the drop in Peab AB'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 |
| Peab AB vs. G5 Entertainment publ | Peab AB vs. Catena Media plc | Peab AB vs. OptiCept Technologies AB | Peab AB vs. TF Bank 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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