Correlation Between Footway Group and Dlaboratory Sweden
Can any of the company-specific risk be diversified away by investing in both Footway Group and Dlaboratory Sweden 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 Footway Group and Dlaboratory Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Footway Group AB and Dlaboratory Sweden AB, you can compare the effects of market volatilities on Footway Group and Dlaboratory Sweden 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 Footway Group with a short position of Dlaboratory Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Footway Group and Dlaboratory Sweden.
Diversification Opportunities for Footway Group and Dlaboratory Sweden
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Footway and Dlaboratory is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Footway Group AB and Dlaboratory Sweden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dlaboratory Sweden and Footway Group 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 Footway Group AB are associated (or correlated) with Dlaboratory Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dlaboratory Sweden has no effect on the direction of Footway Group i.e., Footway Group and Dlaboratory Sweden go up and down completely randomly.
Pair Corralation between Footway Group and Dlaboratory Sweden
Assuming the 90 days trading horizon Footway Group AB is expected to under-perform the Dlaboratory Sweden. But the stock apears to be less risky and, when comparing its historical volatility, Footway Group AB is 1.15 times less risky than Dlaboratory Sweden. The stock trades about -0.16 of its potential returns per unit of risk. The Dlaboratory Sweden AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 196.00 in Dlaboratory Sweden AB on September 2, 2024 and sell it today you would earn a total of 10.00 from holding Dlaboratory Sweden AB or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Footway Group AB vs. Dlaboratory Sweden AB
Performance |
| Timeline |
| Footway Group AB |
| Dlaboratory Sweden |
Footway Group and Dlaboratory Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Footway Group and Dlaboratory Sweden
The main advantage of trading using opposite Footway Group and Dlaboratory Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Footway Group position performs unexpectedly, Dlaboratory Sweden 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 Dlaboratory Sweden will offset losses from the drop in Dlaboratory Sweden's long position.| Footway Group vs. Karnov Group AB | Footway Group vs. Nordic Waterproofing Holding | Footway Group vs. Lime Technologies AB |
| Dlaboratory Sweden vs. iZafe Group AB | Dlaboratory Sweden vs. Lipigon Pharmaceuticals AB | Dlaboratory Sweden vs. Garo AB | Dlaboratory Sweden vs. Akelius Residential Property |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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