Correlation Between EQT AB and Investor
Can any of the company-specific risk be diversified away by investing in both EQT AB and Investor 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 EQT AB and Investor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT AB and Investor AB ser, you can compare the effects of market volatilities on EQT AB and Investor 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 EQT AB with a short position of Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT AB and Investor.
Diversification Opportunities for EQT AB and Investor
Very poor diversification
The 3 months correlation between EQT and Investor is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and Investor AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB ser and EQT 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 EQT AB are associated (or correlated) with Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB ser has no effect on the direction of EQT AB i.e., EQT AB and Investor go up and down completely randomly.
Pair Corralation between EQT AB and Investor
Assuming the 90 days trading horizon EQT AB is expected to generate 3.3 times more return on investment than Investor. However, EQT AB is 3.3 times more volatile than Investor AB ser. It trades about 0.26 of its potential returns per unit of risk. Investor AB ser is currently generating about 0.38 per unit of risk. If you would invest 30,920 in EQT AB on November 2, 2024 and sell it today you would earn a total of 5,020 from holding EQT AB or generate 16.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EQT AB vs. Investor AB ser
Performance |
| Timeline |
| EQT AB |
| Investor AB ser |
EQT AB and Investor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQT AB and Investor
The main advantage of trading using opposite EQT AB and Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT AB position performs unexpectedly, Investor 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 Investor will offset losses from the drop in Investor's long position.| EQT AB vs. Investor AB ser | EQT AB vs. Kinnevik Investment AB | EQT AB vs. Samhllsbyggnadsbolaget i Norden | EQT AB vs. Investment AB Latour |
| Investor vs. Kinnevik Investment AB | Investor vs. Investment AB Latour | Investor vs. Samhllsbyggnadsbolaget i Norden | Investor vs. Industrivarden AB ser |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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