Correlation Between Evolution and Lindab International
Can any of the company-specific risk be diversified away by investing in both Evolution and Lindab International 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 Lindab International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution AB and Lindab International AB, you can compare the effects of market volatilities on Evolution and Lindab International 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 Lindab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution and Lindab International.
Diversification Opportunities for Evolution and Lindab International
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Evolution and Lindab is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Evolution AB and Lindab International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindab International 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 Lindab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindab International has no effect on the direction of Evolution i.e., Evolution and Lindab International go up and down completely randomly.
Pair Corralation between Evolution and Lindab International
Assuming the 90 days trading horizon Evolution AB is expected to generate 0.91 times more return on investment than Lindab International. However, Evolution AB is 1.1 times less risky than Lindab International. It trades about -0.05 of its potential returns per unit of risk. Lindab International AB is currently generating about -0.07 per unit of risk. If you would invest 104,000 in Evolution AB on September 3, 2024 and sell it today you would lose (8,800) from holding Evolution AB or give up 8.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolution AB vs. Lindab International AB
Performance |
| Timeline |
| Evolution AB |
| Lindab International |
Evolution and Lindab International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution and Lindab International
The main advantage of trading using opposite Evolution and Lindab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution position performs unexpectedly, Lindab International 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 Lindab International will offset losses from the drop in Lindab International's long position.| Evolution vs. Embracer Group AB | Evolution vs. Sinch AB | Evolution vs. Kambi Group PLC | Evolution vs. Samhllsbyggnadsbolaget i Norden |
| Lindab International vs. Inwido AB | Lindab International vs. Nolato AB | Lindab International vs. Trelleborg AB | Lindab International vs. Peab 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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