Correlation Between Garo AB and Teqnion AB
Can any of the company-specific risk be diversified away by investing in both Garo AB and Teqnion 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 Garo AB and Teqnion AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garo AB and Teqnion AB, you can compare the effects of market volatilities on Garo AB and Teqnion 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 Garo AB with a short position of Teqnion AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garo AB and Teqnion AB.
Diversification Opportunities for Garo AB and Teqnion AB
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Garo and Teqnion is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Garo AB and Teqnion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teqnion AB and Garo AB 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 Garo AB are associated (or correlated) with Teqnion AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teqnion AB has no effect on the direction of Garo AB i.e., Garo AB and Teqnion AB go up and down completely randomly.
Pair Corralation between Garo AB and Teqnion AB
Assuming the 90 days trading horizon Garo AB is expected to generate 2.37 times more return on investment than Teqnion AB. However, Garo AB is 2.37 times more volatile than Teqnion AB. It trades about -0.1 of its potential returns per unit of risk. Teqnion AB is currently generating about -0.58 per unit of risk. If you would invest 2,100 in Garo AB on August 25, 2024 and sell it today you would lose (122.00) from holding Garo AB or give up 5.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garo AB vs. Teqnion AB
Performance |
| Timeline |
| Garo AB |
| Teqnion AB |
Garo AB and Teqnion AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garo AB and Teqnion AB
The main advantage of trading using opposite Garo AB and Teqnion AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garo AB position performs unexpectedly, Teqnion 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 Teqnion AB will offset losses from the drop in Teqnion AB's long position.| Garo AB vs. Addtech AB | Garo AB vs. Teqnion AB | Garo AB vs. Vitec Software Group | Garo AB vs. Lagercrantz Group AB |
| Teqnion AB vs. Indutrade AB | Teqnion AB vs. Lifco AB | Teqnion AB vs. Lagercrantz Group AB | Teqnion AB vs. AddLife 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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