Correlation Between Evolution and CDON AB
Can any of the company-specific risk be diversified away by investing in both Evolution and CDON AB 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 Evolution and CDON AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution AB and CDON AB, you can compare the effects of market volatilities on Evolution and CDON 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 Evolution with a short position of CDON AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution and CDON AB.
Diversification Opportunities for Evolution and CDON AB
Weak diversification
The 3 months correlation between Evolution and CDON is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Evolution AB and CDON AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDON AB and Evolution 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 Evolution AB are associated (or correlated) with CDON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDON AB has no effect on the direction of Evolution i.e., Evolution and CDON AB go up and down completely randomly.
Pair Corralation between Evolution and CDON AB
Assuming the 90 days trading horizon Evolution AB is expected to generate 0.48 times more return on investment than CDON AB. However, Evolution AB is 2.09 times less risky than CDON AB. It trades about -0.01 of its potential returns per unit of risk. CDON AB is currently generating about -0.02 per unit of risk. If you would invest 108,516 in Evolution AB on September 3, 2024 and sell it today you would lose (13,316) from holding Evolution AB or give up 12.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolution AB vs. CDON AB
Performance |
| Timeline |
| Evolution AB |
| CDON AB |
Evolution and CDON AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution and CDON AB
The main advantage of trading using opposite Evolution and CDON AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution position performs unexpectedly, CDON 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 CDON AB will offset losses from the drop in CDON AB's long position.| Evolution vs. Embracer Group AB | Evolution vs. Sinch AB | Evolution vs. Kambi Group PLC | Evolution vs. Samhllsbyggnadsbolaget i Norden |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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