Correlation Between Dlaboratory Sweden and Footway Group
Can any of the company-specific risk be diversified away by investing in both Dlaboratory Sweden and Footway Group 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 Dlaboratory Sweden and Footway Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dlaboratory Sweden AB and Footway Group AB, you can compare the effects of market volatilities on Dlaboratory Sweden and Footway Group 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 Dlaboratory Sweden with a short position of Footway Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dlaboratory Sweden and Footway Group.
Diversification Opportunities for Dlaboratory Sweden and Footway Group
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dlaboratory and Footway is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dlaboratory Sweden AB and Footway Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Footway Group AB and Dlaboratory Sweden 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 Dlaboratory Sweden AB are associated (or correlated) with Footway Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Footway Group AB has no effect on the direction of Dlaboratory Sweden i.e., Dlaboratory Sweden and Footway Group go up and down completely randomly.
Pair Corralation between Dlaboratory Sweden and Footway Group
Assuming the 90 days trading horizon Dlaboratory Sweden AB is expected to generate 1.15 times more return on investment than Footway Group. However, Dlaboratory Sweden is 1.15 times more volatile than Footway Group AB. It trades about 0.07 of its potential returns per unit of risk. Footway Group AB is currently generating about -0.16 per unit of risk. If you would invest 196.00 in Dlaboratory Sweden AB on September 2, 2024 and sell it today you would earn a total of 10.00 from holding Dlaboratory Sweden AB or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dlaboratory Sweden AB vs. Footway Group AB
Performance |
| Timeline |
| Dlaboratory Sweden |
| Footway Group AB |
Dlaboratory Sweden and Footway Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dlaboratory Sweden and Footway Group
The main advantage of trading using opposite Dlaboratory Sweden and Footway Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dlaboratory Sweden position performs unexpectedly, Footway Group 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 Footway Group will offset losses from the drop in Footway Group's long position.| Dlaboratory Sweden vs. iZafe Group AB | Dlaboratory Sweden vs. Lipigon Pharmaceuticals AB | Dlaboratory Sweden vs. Garo AB | Dlaboratory Sweden vs. Akelius Residential Property |
| Footway Group vs. Karnov Group AB | Footway Group vs. Nordic Waterproofing Holding | Footway Group vs. Lime Technologies 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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