Correlation Between Exel Composites and Dovre Group
Can any of the company-specific risk be diversified away by investing in both Exel Composites and Dovre Group 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 Exel Composites and Dovre Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exel Composites Oyj and Dovre Group Plc, you can compare the effects of market volatilities on Exel Composites and Dovre Group 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 Exel Composites with a short position of Dovre Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exel Composites and Dovre Group.
Diversification Opportunities for Exel Composites and Dovre Group
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Exel and Dovre is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Exel Composites Oyj and Dovre Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dovre Group Plc and Exel Composites 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 Exel Composites Oyj are associated (or correlated) with Dovre Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dovre Group Plc has no effect on the direction of Exel Composites i.e., Exel Composites and Dovre Group go up and down completely randomly.
Pair Corralation between Exel Composites and Dovre Group
Assuming the 90 days trading horizon Exel Composites is expected to generate 1.06 times less return on investment than Dovre Group. But when comparing it to its historical volatility, Exel Composites Oyj is 2.27 times less risky than Dovre Group. It trades about 0.29 of its potential returns per unit of risk. Dovre Group Plc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Dovre Group Plc on November 2, 2024 and sell it today you would earn a total of 3.00 from holding Dovre Group Plc or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Exel Composites Oyj vs. Dovre Group Plc
Performance |
| Timeline |
| Exel Composites Oyj |
| Dovre Group Plc |
Exel Composites and Dovre Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exel Composites and Dovre Group
The main advantage of trading using opposite Exel Composites and Dovre Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exel Composites position performs unexpectedly, Dovre Group 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 Dovre Group will offset losses from the drop in Dovre Group's long position.| Exel Composites vs. Detection Technology OY | Exel Composites vs. SSH Communications Security | Exel Composites vs. Nightingale Health Oyj | Exel Composites vs. United Bankers Oyj |
| Dovre Group vs. Konecranes Plc | Dovre Group vs. Wartsila Oyj Abp | Dovre Group vs. Valmet Oyj | Dovre Group vs. UPM Kymmene Oyj |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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