Correlation Between Essity AB and Ellen AB
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By analyzing existing cross correlation between Essity AB and Ellen AB, you can compare the effects of market volatilities on Essity AB and Ellen 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 Ellen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essity AB and Ellen AB.
Diversification Opportunities for Essity AB and Ellen AB
Excellent diversification
The 3 months correlation between Essity and Ellen is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Essity AB and Ellen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellen 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 Ellen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellen AB has no effect on the direction of Essity AB i.e., Essity AB and Ellen AB go up and down completely randomly.
Pair Corralation between Essity AB and Ellen AB
Assuming the 90 days trading horizon Essity AB is expected to generate 3.04 times less return on investment than Ellen AB. But when comparing it to its historical volatility, Essity AB is 7.18 times less risky than Ellen AB. It trades about 0.04 of its potential returns per unit of risk. Ellen AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 267.00 in Ellen AB on August 26, 2024 and sell it today you would lose (161.00) from holding Ellen AB or give up 60.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.39% |
| Values | Daily Returns |
Essity AB vs. Ellen AB
Performance |
| Timeline |
| Essity AB |
| Ellen AB |
Essity AB and Ellen AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essity AB and Ellen AB
The main advantage of trading using opposite Essity AB and Ellen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essity AB position performs unexpectedly, Ellen 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 Ellen AB will offset losses from the drop in Ellen AB's long position.| Essity AB vs. Mendus AB | Essity AB vs. JonDeTech Sensors | Essity AB vs. Nexam Chemical Holding | Essity AB vs. Lohilo Foods 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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