Correlation Between ALERION CLEANPOWER and Indutrade
Can any of the company-specific risk be diversified away by investing in both ALERION CLEANPOWER and Indutrade 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 ALERION CLEANPOWER and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALERION CLEANPOWER and Indutrade AB, you can compare the effects of market volatilities on ALERION CLEANPOWER and Indutrade 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 ALERION CLEANPOWER with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALERION CLEANPOWER and Indutrade.
Diversification Opportunities for ALERION CLEANPOWER and Indutrade
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ALERION and Indutrade is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and ALERION CLEANPOWER 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 ALERION CLEANPOWER are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of ALERION CLEANPOWER i.e., ALERION CLEANPOWER and Indutrade go up and down completely randomly.
Pair Corralation between ALERION CLEANPOWER and Indutrade
Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the Indutrade. But the stock apears to be less risky and, when comparing its historical volatility, ALERION CLEANPOWER is 1.03 times less risky than Indutrade. The stock trades about -0.01 of its potential returns per unit of risk. The Indutrade AB is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,380 in Indutrade AB on October 23, 2024 and sell it today you would earn a total of 178.00 from holding Indutrade AB or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALERION CLEANPOWER vs. Indutrade AB
Performance |
| Timeline |
| ALERION CLEANPOWER |
| Indutrade AB |
ALERION CLEANPOWER and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALERION CLEANPOWER and Indutrade
The main advantage of trading using opposite ALERION CLEANPOWER and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALERION CLEANPOWER position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| ALERION CLEANPOWER vs. Encavis AG | ALERION CLEANPOWER vs. CenterPoint Energy | ALERION CLEANPOWER vs. Gossan Resources | ALERION CLEANPOWER vs. CALTAGIRONE EDITORE |
| Indutrade vs. PLAYMATES TOYS | Indutrade vs. Gaming and Leisure | Indutrade vs. TERADATA | Indutrade vs. Hyrican Informationssysteme Aktiengesellschaft |
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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