Correlation Between Erria AS and FLSmidth
Can any of the company-specific risk be diversified away by investing in both Erria AS and FLSmidth 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 Erria AS and FLSmidth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erria AS and FLSmidth Co, you can compare the effects of market volatilities on Erria AS and FLSmidth 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 Erria AS with a short position of FLSmidth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erria AS and FLSmidth.
Diversification Opportunities for Erria AS and FLSmidth
Very good diversification
The 3 months correlation between Erria and FLSmidth is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Erria AS and FLSmidth Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLSmidth and Erria AS 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 Erria AS are associated (or correlated) with FLSmidth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLSmidth has no effect on the direction of Erria AS i.e., Erria AS and FLSmidth go up and down completely randomly.
Pair Corralation between Erria AS and FLSmidth
Assuming the 90 days trading horizon Erria AS is expected to generate 5.82 times more return on investment than FLSmidth. However, Erria AS is 5.82 times more volatile than FLSmidth Co. It trades about 0.14 of its potential returns per unit of risk. FLSmidth Co is currently generating about 0.12 per unit of risk. If you would invest 304.00 in Erria AS on October 25, 2024 and sell it today you would earn a total of 42.00 from holding Erria AS or generate 13.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Erria AS vs. FLSmidth Co
Performance |
| Timeline |
| Erria AS |
| FLSmidth |
Erria AS and FLSmidth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erria AS and FLSmidth
The main advantage of trading using opposite Erria AS and FLSmidth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erria AS position performs unexpectedly, FLSmidth 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 FLSmidth will offset losses from the drop in FLSmidth's long position.| Erria AS vs. PARKEN Sport Entertainment | Erria AS vs. Fynske Bank AS | Erria AS vs. Prime Office AS | Erria AS vs. Scandinavian Tobacco Group |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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