Correlation Between Essity AB and Alleima AB
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By analyzing existing cross correlation between Essity AB and Alleima AB, you can compare the effects of market volatilities on Essity AB and Alleima AB 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 Essity AB with a short position of Alleima AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essity AB and Alleima AB.
Diversification Opportunities for Essity AB and Alleima AB
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Essity and Alleima is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Essity AB and Alleima AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alleima AB and Essity 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 Essity AB are associated (or correlated) with Alleima AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alleima AB has no effect on the direction of Essity AB i.e., Essity AB and Alleima AB go up and down completely randomly.
Pair Corralation between Essity AB and Alleima AB
Assuming the 90 days trading horizon Essity AB is expected to under-perform the Alleima AB. But the stock apears to be less risky and, when comparing its historical volatility, Essity AB is 1.21 times less risky than Alleima AB. The stock trades about -0.14 of its potential returns per unit of risk. The Alleima AB is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 7,625 in Alleima AB on November 5, 2024 and sell it today you would earn a total of 1,600 from holding Alleima AB or generate 20.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essity AB vs. Alleima AB
Performance |
| Timeline |
| Essity AB |
| Alleima AB |
Essity AB and Alleima AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essity AB and Alleima AB
The main advantage of trading using opposite Essity AB and Alleima AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essity AB position performs unexpectedly, Alleima AB 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 Alleima AB will offset losses from the drop in Alleima AB's long position.| Essity AB vs. Svenska Cellulosa Aktiebolaget | Essity AB vs. ASSA ABLOY AB | Essity AB vs. AB Electrolux | Essity AB vs. AB SKF |
| Alleima AB vs. Sandvik AB | Alleima AB vs. AB SKF | Alleima AB vs. Svenska Handelsbanken AB | Alleima AB vs. Essity 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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