Correlation Between G5 Entertainment and Rottneros
Can any of the company-specific risk be diversified away by investing in both G5 Entertainment and Rottneros 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 Rottneros 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 Rottneros AB, you can compare the effects of market volatilities on G5 Entertainment and Rottneros 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 Rottneros. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Rottneros.
Diversification Opportunities for G5 Entertainment and Rottneros
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between G5EN and Rottneros is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment publ and Rottneros AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rottneros 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 Rottneros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rottneros AB has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and Rottneros go up and down completely randomly.
Pair Corralation between G5 Entertainment and Rottneros
Assuming the 90 days trading horizon G5 Entertainment publ is expected to generate 1.26 times more return on investment than Rottneros. However, G5 Entertainment is 1.26 times more volatile than Rottneros AB. It trades about 0.13 of its potential returns per unit of risk. Rottneros AB is currently generating about -0.03 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. Rottneros AB
Performance |
| Timeline |
| G5 Entertainment publ |
| Rottneros AB |
G5 Entertainment and Rottneros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G5 Entertainment and Rottneros
The main advantage of trading using opposite G5 Entertainment and Rottneros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment position performs unexpectedly, Rottneros 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 Rottneros will offset losses from the drop in Rottneros' long position.| G5 Entertainment vs. Tele2 AB | G5 Entertainment vs. Swedbank AB | G5 Entertainment vs. Svenska Handelsbanken AB | G5 Entertainment vs. Nordea Bank Abp |
| Rottneros vs. BillerudKorsnas AB | Rottneros vs. SSAB AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Axfood 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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