Correlation Between Ellen AB and Precomp Solutions
Can any of the company-specific risk be diversified away by investing in both Ellen AB and Precomp Solutions 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 Ellen AB and Precomp Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ellen AB and Precomp Solutions AB, you can compare the effects of market volatilities on Ellen AB and Precomp Solutions 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 Ellen AB with a short position of Precomp Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellen AB and Precomp Solutions.
Diversification Opportunities for Ellen AB and Precomp Solutions
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ellen and Precomp is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ellen AB and Precomp Solutions AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precomp Solutions and Ellen AB 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 Ellen AB are associated (or correlated) with Precomp Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precomp Solutions has no effect on the direction of Ellen AB i.e., Ellen AB and Precomp Solutions go up and down completely randomly.
Pair Corralation between Ellen AB and Precomp Solutions
Assuming the 90 days trading horizon Ellen AB is expected to under-perform the Precomp Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Ellen AB is 2.83 times less risky than Precomp Solutions. The stock trades about -0.04 of its potential returns per unit of risk. The Precomp Solutions AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 93.00 in Precomp Solutions AB on September 3, 2024 and sell it today you would lose (14.00) from holding Precomp Solutions AB or give up 15.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellen AB vs. Precomp Solutions AB
Performance |
| Timeline |
| Ellen AB |
| Precomp Solutions |
Ellen AB and Precomp Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellen AB and Precomp Solutions
The main advantage of trading using opposite Ellen AB and Precomp Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellen AB position performs unexpectedly, Precomp Solutions 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 Precomp Solutions will offset losses from the drop in Precomp Solutions' long position.| Ellen AB vs. Mendus AB | Ellen AB vs. JonDeTech Sensors | Ellen AB vs. Nexam Chemical Holding | Ellen AB vs. Lohilo Foods AB |
| Precomp Solutions vs. NetJobs Group AB | Precomp Solutions vs. Nicoccino Holding AB | Precomp Solutions vs. Ellen AB | Precomp Solutions vs. Mavshack publ 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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