Correlation Between Diadrom Holding and Generic Sweden
Can any of the company-specific risk be diversified away by investing in both Diadrom Holding and Generic Sweden 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 Diadrom Holding and Generic Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diadrom Holding AB and Generic Sweden publ, you can compare the effects of market volatilities on Diadrom Holding and Generic Sweden 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 Diadrom Holding with a short position of Generic Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diadrom Holding and Generic Sweden.
Diversification Opportunities for Diadrom Holding and Generic Sweden
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Diadrom and Generic is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Diadrom Holding AB and Generic Sweden publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Sweden publ and Diadrom Holding 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 Diadrom Holding AB are associated (or correlated) with Generic Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Sweden publ has no effect on the direction of Diadrom Holding i.e., Diadrom Holding and Generic Sweden go up and down completely randomly.
Pair Corralation between Diadrom Holding and Generic Sweden
Assuming the 90 days trading horizon Diadrom Holding AB is expected to under-perform the Generic Sweden. In addition to that, Diadrom Holding is 1.39 times more volatile than Generic Sweden publ. It trades about -0.26 of its total potential returns per unit of risk. Generic Sweden publ is currently generating about 0.23 per unit of volatility. If you would invest 4,390 in Generic Sweden publ on August 26, 2024 and sell it today you would earn a total of 570.00 from holding Generic Sweden publ or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diadrom Holding AB vs. Generic Sweden publ
Performance |
| Timeline |
| Diadrom Holding AB |
| Generic Sweden publ |
Diadrom Holding and Generic Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diadrom Holding and Generic Sweden
The main advantage of trading using opposite Diadrom Holding and Generic Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diadrom Holding position performs unexpectedly, Generic Sweden 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 Generic Sweden will offset losses from the drop in Generic Sweden's long position.| Diadrom Holding vs. Generic Sweden publ | Diadrom Holding vs. Avensia publ AB | Diadrom Holding vs. Softronic AB | Diadrom Holding vs. Drillcon AB |
| Generic Sweden vs. Novotek AB | Generic Sweden vs. Addnode Group AB | Generic Sweden vs. Softronic AB | Generic Sweden vs. CTT Systems 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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