Correlation Between Clean Motion and Dignitana
Can any of the company-specific risk be diversified away by investing in both Clean Motion and Dignitana 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 Clean Motion and Dignitana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Motion AB and Dignitana AB, you can compare the effects of market volatilities on Clean Motion and Dignitana 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 Clean Motion with a short position of Dignitana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Motion and Dignitana.
Diversification Opportunities for Clean Motion and Dignitana
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clean and Dignitana is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Clean Motion AB and Dignitana AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dignitana AB and Clean Motion 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 Clean Motion AB are associated (or correlated) with Dignitana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dignitana AB has no effect on the direction of Clean Motion i.e., Clean Motion and Dignitana go up and down completely randomly.
Pair Corralation between Clean Motion and Dignitana
Assuming the 90 days trading horizon Clean Motion AB is expected to generate 1.16 times more return on investment than Dignitana. However, Clean Motion is 1.16 times more volatile than Dignitana AB. It trades about -0.01 of its potential returns per unit of risk. Dignitana AB is currently generating about -0.03 per unit of risk. If you would invest 112.00 in Clean Motion AB on August 26, 2024 and sell it today you would lose (78.00) from holding Clean Motion AB or give up 69.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Motion AB vs. Dignitana AB
Performance |
| Timeline |
| Clean Motion AB |
| Dignitana AB |
Clean Motion and Dignitana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Motion and Dignitana
The main advantage of trading using opposite Clean Motion and Dignitana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Motion position performs unexpectedly, Dignitana 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 Dignitana will offset losses from the drop in Dignitana's long position.| Clean Motion vs. Volvo Car AB | Clean Motion vs. KABE Group AB | Clean Motion vs. IAR Systems Group | Clean Motion vs. Norva24 Group AB |
| Dignitana vs. C Rad AB | Dignitana vs. Paxman AB | Dignitana vs. Enzymatica publ AB | Dignitana vs. Episurf Medical 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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