Correlation Between Clean Motion and Rottneros
Can any of the company-specific risk be diversified away by investing in both Clean Motion and Rottneros 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 Rottneros 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 Rottneros AB, you can compare the effects of market volatilities on Clean Motion and Rottneros 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 Rottneros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Motion and Rottneros.
Diversification Opportunities for Clean Motion and Rottneros
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clean and Rottneros is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Clean Motion AB and Rottneros AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rottneros 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 Rottneros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rottneros AB has no effect on the direction of Clean Motion i.e., Clean Motion and Rottneros go up and down completely randomly.
Pair Corralation between Clean Motion and Rottneros
Assuming the 90 days trading horizon Clean Motion AB is expected to under-perform the Rottneros. In addition to that, Clean Motion is 3.99 times more volatile than Rottneros AB. It trades about -0.02 of its total potential returns per unit of risk. Rottneros AB is currently generating about -0.02 per unit of volatility. If you would invest 1,093 in Rottneros AB on September 4, 2024 and sell it today you would lose (162.00) from holding Rottneros AB or give up 14.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Motion AB vs. Rottneros AB
Performance |
| Timeline |
| Clean Motion AB |
| Rottneros AB |
Clean Motion and Rottneros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Motion and Rottneros
The main advantage of trading using opposite Clean Motion and Rottneros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Motion position performs unexpectedly, Rottneros 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 Rottneros will offset losses from the drop in Rottneros' long position.| Clean Motion vs. Traton SE | Clean Motion vs. KABE Group AB | Clean Motion vs. IAR Systems Group | Clean Motion vs. Mekonomen AB |
| Rottneros vs. BillerudKorsnas AB | Rottneros vs. SSAB AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Axfood 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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