Correlation Between Drillcon and Generic Sweden
Can any of the company-specific risk be diversified away by investing in both Drillcon 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 Drillcon and Generic Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Drillcon AB and Generic Sweden publ, you can compare the effects of market volatilities on Drillcon 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 Drillcon with a short position of Generic Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Drillcon and Generic Sweden.
Diversification Opportunities for Drillcon and Generic Sweden
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Drillcon and Generic is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Drillcon 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 Drillcon 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 Drillcon 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 Drillcon i.e., Drillcon and Generic Sweden go up and down completely randomly.
Pair Corralation between Drillcon and Generic Sweden
Assuming the 90 days trading horizon Drillcon AB is expected to under-perform the Generic Sweden. In addition to that, Drillcon is 1.8 times more volatile than Generic Sweden publ. It trades about -0.13 of its total potential returns per unit of risk. Generic Sweden publ is currently generating about 0.15 per unit of volatility. If you would invest 4,560 in Generic Sweden publ on August 30, 2024 and sell it today you would earn a total of 580.00 from holding Generic Sweden publ or generate 12.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Drillcon AB vs. Generic Sweden publ
Performance |
| Timeline |
| Drillcon AB |
| Generic Sweden publ |
Drillcon and Generic Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Drillcon and Generic Sweden
The main advantage of trading using opposite Drillcon and Generic Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Drillcon 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.| Drillcon vs. Bjorn Borg AB | Drillcon vs. Diadrom Holding AB | Drillcon vs. Anoto Group AB | Drillcon vs. Cloetta AB |
| Generic Sweden vs. FormPipe Software AB | Generic Sweden vs. Novotek AB | Generic Sweden vs. Hanza AB | Generic Sweden vs. Genovis 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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