Correlation Between Fagerhult and Nolato AB
Can any of the company-specific risk be diversified away by investing in both Fagerhult and Nolato 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 Fagerhult and Nolato AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fagerhult AB and Nolato AB, you can compare the effects of market volatilities on Fagerhult and Nolato 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 Fagerhult with a short position of Nolato AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fagerhult and Nolato AB.
Diversification Opportunities for Fagerhult and Nolato AB
Significant diversification
The 3 months correlation between Fagerhult and Nolato is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Fagerhult AB and Nolato AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nolato AB and Fagerhult 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 Fagerhult AB are associated (or correlated) with Nolato AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nolato AB has no effect on the direction of Fagerhult i.e., Fagerhult and Nolato AB go up and down completely randomly.
Pair Corralation between Fagerhult and Nolato AB
Assuming the 90 days trading horizon Fagerhult AB is expected to under-perform the Nolato AB. But the stock apears to be less risky and, when comparing its historical volatility, Fagerhult AB is 1.19 times less risky than Nolato AB. The stock trades about -0.21 of its potential returns per unit of risk. The Nolato AB is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 5,675 in Nolato AB on September 2, 2024 and sell it today you would lose (280.00) from holding Nolato AB or give up 4.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fagerhult AB vs. Nolato AB
Performance |
| Timeline |
| Fagerhult AB |
| Nolato AB |
Fagerhult and Nolato AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fagerhult and Nolato AB
The main advantage of trading using opposite Fagerhult and Nolato AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fagerhult position performs unexpectedly, Nolato 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 Nolato AB will offset losses from the drop in Nolato AB's long position.| Fagerhult vs. Samhllsbyggnadsbolaget i Norden | Fagerhult vs. Sinch AB | Fagerhult vs. Embracer Group AB | Fagerhult vs. Evolution AB |
| Nolato AB vs. SaltX Technology Holding | Nolato AB vs. Acconeer AB | Nolato AB vs. GomSpace Group AB | Nolato AB vs. KABE Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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