Correlation Between FlexQube and Indutrade
Can any of the company-specific risk be diversified away by investing in both FlexQube 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 FlexQube and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexQube AB and Indutrade AB, you can compare the effects of market volatilities on FlexQube 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 FlexQube with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexQube and Indutrade.
Diversification Opportunities for FlexQube and Indutrade
Weak diversification
The 3 months correlation between FlexQube and Indutrade is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding FlexQube AB and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and FlexQube 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 FlexQube AB 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 FlexQube i.e., FlexQube and Indutrade go up and down completely randomly.
Pair Corralation between FlexQube and Indutrade
Assuming the 90 days trading horizon FlexQube AB is expected to under-perform the Indutrade. In addition to that, FlexQube is 2.32 times more volatile than Indutrade AB. It trades about 0.0 of its total potential returns per unit of risk. Indutrade AB is currently generating about 0.0 per unit of volatility. If you would invest 28,840 in Indutrade AB on September 5, 2024 and sell it today you would lose (80.00) from holding Indutrade AB or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexQube AB vs. Indutrade AB
Performance |
| Timeline |
| FlexQube AB |
| Indutrade AB |
FlexQube and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexQube and Indutrade
The main advantage of trading using opposite FlexQube and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexQube 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.The idea behind FlexQube AB and Indutrade AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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