Correlation Between Diadrom Holding and Rolling Optics
Can any of the company-specific risk be diversified away by investing in both Diadrom Holding and Rolling Optics 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 Rolling Optics 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 Rolling Optics Holding, you can compare the effects of market volatilities on Diadrom Holding and Rolling Optics 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 Rolling Optics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diadrom Holding and Rolling Optics.
Diversification Opportunities for Diadrom Holding and Rolling Optics
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diadrom and Rolling is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Diadrom Holding AB and Rolling Optics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rolling Optics Holding 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 Rolling Optics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rolling Optics Holding has no effect on the direction of Diadrom Holding i.e., Diadrom Holding and Rolling Optics go up and down completely randomly.
Pair Corralation between Diadrom Holding and Rolling Optics
Assuming the 90 days trading horizon Diadrom Holding AB is expected to under-perform the Rolling Optics. But the stock apears to be less risky and, when comparing its historical volatility, Diadrom Holding AB is 1.29 times less risky than Rolling Optics. The stock trades about -0.16 of its potential returns per unit of risk. The Rolling Optics Holding is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 70.00 in Rolling Optics Holding on September 1, 2024 and sell it today you would lose (2.00) from holding Rolling Optics Holding or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diadrom Holding AB vs. Rolling Optics Holding
Performance |
| Timeline |
| Diadrom Holding AB |
| Rolling Optics Holding |
Diadrom Holding and Rolling Optics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diadrom Holding and Rolling Optics
The main advantage of trading using opposite Diadrom Holding and Rolling Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diadrom Holding position performs unexpectedly, Rolling Optics 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 Rolling Optics will offset losses from the drop in Rolling Optics' long position.| Diadrom Holding vs. Enea AB | Diadrom Holding vs. Novotek AB | Diadrom Holding vs. Addnode Group AB | Diadrom Holding vs. Softronic AB |
| Rolling Optics vs. Zwipe AS | Rolling Optics vs. Zaplox AB | Rolling Optics vs. XMReality AB | Rolling Optics vs. Ratos 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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