Correlation Between AB Electrolux and Embellence Group
Can any of the company-specific risk be diversified away by investing in both AB Electrolux and Embellence 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 AB Electrolux and Embellence Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Electrolux and Embellence Group AB, you can compare the effects of market volatilities on AB Electrolux and Embellence 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 AB Electrolux with a short position of Embellence Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Electrolux and Embellence Group.
Diversification Opportunities for AB Electrolux and Embellence Group
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ELUX-B and Embellence is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding AB Electrolux and Embellence Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embellence Group and AB Electrolux 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 AB Electrolux are associated (or correlated) with Embellence Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embellence Group has no effect on the direction of AB Electrolux i.e., AB Electrolux and Embellence Group go up and down completely randomly.
Pair Corralation between AB Electrolux and Embellence Group
Assuming the 90 days trading horizon AB Electrolux is expected to under-perform the Embellence Group. In addition to that, AB Electrolux is 1.19 times more volatile than Embellence Group AB. It trades about -0.03 of its total potential returns per unit of risk. Embellence Group AB is currently generating about 0.06 per unit of volatility. If you would invest 2,330 in Embellence Group AB on August 27, 2024 and sell it today you would earn a total of 680.00 from holding Embellence Group AB or generate 29.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Electrolux vs. Embellence Group AB
Performance |
| Timeline |
| AB Electrolux |
| Embellence Group |
AB Electrolux and Embellence Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Electrolux and Embellence Group
The main advantage of trading using opposite AB Electrolux and Embellence Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Electrolux position performs unexpectedly, Embellence 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 Embellence Group will offset losses from the drop in Embellence Group's long position.| AB Electrolux vs. AB SKF | AB Electrolux vs. Tele2 AB | AB Electrolux vs. Sandvik AB | AB Electrolux vs. Skanska AB |
| Embellence Group vs. AB Electrolux | Embellence Group vs. Husqvarna AB | Embellence Group vs. Essity AB | Embellence Group vs. Dometic Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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