Correlation Between Embellence Group and Mekonomen
Can any of the company-specific risk be diversified away by investing in both Embellence Group and Mekonomen 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 Mekonomen 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 Mekonomen AB, you can compare the effects of market volatilities on Embellence Group and Mekonomen 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 Mekonomen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embellence Group and Mekonomen.
Diversification Opportunities for Embellence Group and Mekonomen
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Embellence and Mekonomen is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Embellence Group AB and Mekonomen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekonomen AB 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 Mekonomen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekonomen AB has no effect on the direction of Embellence Group i.e., Embellence Group and Mekonomen go up and down completely randomly.
Pair Corralation between Embellence Group and Mekonomen
Assuming the 90 days trading horizon Embellence Group AB is expected to generate 0.95 times more return on investment than Mekonomen. However, Embellence Group AB is 1.05 times less risky than Mekonomen. It trades about -0.19 of its potential returns per unit of risk. Mekonomen AB is currently generating about -0.19 per unit of risk. If you would invest 3,160 in Embellence Group AB on August 30, 2024 and sell it today you would lose (210.00) from holding Embellence Group AB or give up 6.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embellence Group AB vs. Mekonomen AB
Performance |
| Timeline |
| Embellence Group |
| Mekonomen AB |
Embellence Group and Mekonomen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embellence Group and Mekonomen
The main advantage of trading using opposite Embellence Group and Mekonomen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embellence Group position performs unexpectedly, Mekonomen 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 Mekonomen will offset losses from the drop in Mekonomen's long position.| Embellence Group vs. AB Electrolux | Embellence Group vs. Husqvarna AB | Embellence Group vs. Essity AB | Embellence Group vs. Dometic Group AB |
| Mekonomen vs. Sinch AB | Mekonomen vs. Hexatronic Group AB | Mekonomen vs. NIBE Industrier AB | Mekonomen vs. Evolution 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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