Correlation Between Embellence Group and AB Electrolux
Can any of the company-specific risk be diversified away by investing in both Embellence Group and AB Electrolux 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 Embellence Group and AB Electrolux into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embellence Group AB and AB Electrolux, you can compare the effects of market volatilities on Embellence Group and AB Electrolux 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 Embellence Group with a short position of AB Electrolux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embellence Group and AB Electrolux.
Diversification Opportunities for Embellence Group and AB Electrolux
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Embellence and ELUX-B is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Embellence Group AB and AB Electrolux in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Electrolux and Embellence Group 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 Embellence Group AB are associated (or correlated) with AB Electrolux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Electrolux has no effect on the direction of Embellence Group i.e., Embellence Group and AB Electrolux go up and down completely randomly.
Pair Corralation between Embellence Group and AB Electrolux
Assuming the 90 days trading horizon Embellence Group AB is expected to generate 0.82 times more return on investment than AB Electrolux. However, Embellence Group AB is 1.22 times less risky than AB Electrolux. It trades about 0.06 of its potential returns per unit of risk. AB Electrolux is currently generating about 0.0 per unit of risk. If you would invest 2,500 in Embellence Group AB on August 27, 2024 and sell it today you would earn a total of 510.00 from holding Embellence Group AB or generate 20.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embellence Group AB vs. AB Electrolux
Performance |
| Timeline |
| Embellence Group |
| AB Electrolux |
Embellence Group and AB Electrolux Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embellence Group and AB Electrolux
The main advantage of trading using opposite Embellence Group and AB Electrolux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embellence Group position performs unexpectedly, AB Electrolux 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 AB Electrolux will offset losses from the drop in AB Electrolux's long position.| Embellence Group vs. AB Electrolux | Embellence Group vs. Husqvarna AB | Embellence Group vs. Essity AB | Embellence Group vs. Dometic Group AB |
| AB Electrolux vs. AB SKF | AB Electrolux vs. Tele2 AB | AB Electrolux vs. Sandvik AB | AB Electrolux vs. Skanska 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |