Correlation Between Ferronordic and Indutrade
Can any of the company-specific risk be diversified away by investing in both Ferronordic 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 Ferronordic and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferronordic AB and Indutrade AB, you can compare the effects of market volatilities on Ferronordic 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 Ferronordic with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferronordic and Indutrade.
Diversification Opportunities for Ferronordic and Indutrade
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ferronordic and Indutrade is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ferronordic AB and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Ferronordic 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 Ferronordic 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 Ferronordic i.e., Ferronordic and Indutrade go up and down completely randomly.
Pair Corralation between Ferronordic and Indutrade
Assuming the 90 days trading horizon Ferronordic is expected to generate 1.02 times less return on investment than Indutrade. But when comparing it to its historical volatility, Ferronordic AB is 1.48 times less risky than Indutrade. It trades about 0.38 of its potential returns per unit of risk. Indutrade AB is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 28,220 in Indutrade AB on November 3, 2024 and sell it today you would earn a total of 2,420 from holding Indutrade AB or generate 8.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferronordic AB vs. Indutrade AB
Performance |
| Timeline |
| Ferronordic AB |
| Indutrade AB |
Ferronordic and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferronordic and Indutrade
The main advantage of trading using opposite Ferronordic and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferronordic 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.| Ferronordic vs. SaveLend Group AB | Ferronordic vs. Svenska Handelsbanken AB | Ferronordic vs. Axfood AB | Ferronordic vs. Lundin Mining |
| Indutrade vs. NOTE AB | Indutrade vs. Proact IT Group | Indutrade vs. SinterCast AB | Indutrade vs. Rottneros 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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