Correlation Between Clas Ohlson and JM AB

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Can any of the company-specific risk be diversified away by investing in both Clas Ohlson and JM 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 Clas Ohlson and JM AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clas Ohlson AB and JM AB, you can compare the effects of market volatilities on Clas Ohlson and JM 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 Clas Ohlson with a short position of JM AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clas Ohlson and JM AB.

Diversification Opportunities for Clas Ohlson and JM AB

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between Clas and JM AB is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Clas Ohlson AB and JM AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM AB and Clas Ohlson 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 Clas Ohlson AB are associated (or correlated) with JM AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM AB has no effect on the direction of Clas Ohlson i.e., Clas Ohlson and JM AB go up and down completely randomly.

Pair Corralation between Clas Ohlson and JM AB

Assuming the 90 days trading horizon Clas Ohlson AB is expected to generate 0.94 times more return on investment than JM AB. However, Clas Ohlson AB is 1.06 times less risky than JM AB. It trades about 0.12 of its potential returns per unit of risk. JM AB is currently generating about 0.03 per unit of risk. If you would invest  7,328  in Clas Ohlson AB on August 26, 2024 and sell it today you would earn a total of  11,832  from holding Clas Ohlson AB or generate 161.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Clas Ohlson AB  vs.  JM AB

 Performance 
       Timeline  
Clas Ohlson AB 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Clas Ohlson AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clas Ohlson sustained solid returns over the last few months and may actually be approaching a breakup point.
JM AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days JM AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Clas Ohlson and JM AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Clas Ohlson and JM AB

The main advantage of trading using opposite Clas Ohlson and JM AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clas Ohlson position performs unexpectedly, JM 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 JM AB will offset losses from the drop in JM AB's long position.
The idea behind Clas Ohlson AB and JM AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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