Correlation Between G5 Entertainment and Holmen AB
Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and Holmen 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 G5 Entertainment and Holmen AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G5 Entertainment publ and Holmen AB, you can compare the effects of market volatilities on G5 Entertainment and Holmen 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 G5 Entertainment with a short position of Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Holmen AB.
Diversification Opportunities for G5 Entertainment and Holmen AB
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between G5EN and Holmen is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment publ and Holmen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB and G5 Entertainment 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 G5 Entertainment publ are associated (or correlated) with Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and Holmen AB go up and down completely randomly.
Pair Corralation between G5 Entertainment and Holmen AB
Assuming the 90 days trading horizon G5 Entertainment publ is expected to generate 2.47 times more return on investment than Holmen AB. However, G5 Entertainment is 2.47 times more volatile than Holmen AB. It trades about 0.13 of its potential returns per unit of risk. Holmen AB is currently generating about -0.04 per unit of risk. If you would invest 9,420 in G5 Entertainment publ on September 4, 2024 and sell it today you would earn a total of 680.00 from holding G5 Entertainment publ or generate 7.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G5 Entertainment publ vs. Holmen AB
Performance |
| Timeline |
| G5 Entertainment publ |
| Holmen AB |
G5 Entertainment and Holmen AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G5 Entertainment and Holmen AB
The main advantage of trading using opposite G5 Entertainment and Holmen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment position performs unexpectedly, Holmen 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 Holmen AB will offset losses from the drop in Holmen AB's long position.| G5 Entertainment vs. Tele2 AB | G5 Entertainment vs. Swedbank AB | G5 Entertainment vs. Svenska Handelsbanken AB | G5 Entertainment vs. Nordea Bank Abp |
| Holmen AB vs. Svenska Cellulosa Aktiebolaget | Holmen AB vs. BillerudKorsnas AB | Holmen AB vs. Boliden AB | Holmen AB vs. Husqvarna 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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