Correlation Between Generic Sweden and DevPort AB

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Can any of the company-specific risk be diversified away by investing in both Generic Sweden and DevPort 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 Generic Sweden and DevPort AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Generic Sweden publ and DevPort AB, you can compare the effects of market volatilities on Generic Sweden and DevPort 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 Generic Sweden with a short position of DevPort AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Sweden and DevPort AB.

Diversification Opportunities for Generic Sweden and DevPort AB

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Generic and DevPort is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Generic Sweden publ and DevPort AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DevPort AB and Generic Sweden 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 Generic Sweden publ are associated (or correlated) with DevPort AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DevPort AB has no effect on the direction of Generic Sweden i.e., Generic Sweden and DevPort AB go up and down completely randomly.

Pair Corralation between Generic Sweden and DevPort AB

Assuming the 90 days trading horizon Generic Sweden publ is expected to generate 1.66 times more return on investment than DevPort AB. However, Generic Sweden is 1.66 times more volatile than DevPort AB. It trades about 0.18 of its potential returns per unit of risk. DevPort AB is currently generating about -0.13 per unit of risk. If you would invest  4,400  in Generic Sweden publ on September 1, 2024 and sell it today you would earn a total of  510.00  from holding Generic Sweden publ or generate 11.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Generic Sweden publ  vs.  DevPort AB

 Performance 
       Timeline  
Generic Sweden publ 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Generic Sweden publ are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Generic Sweden may actually be approaching a critical reversion point that can send shares even higher in December 2024.
DevPort AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DevPort AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Generic Sweden and DevPort AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Generic Sweden and DevPort AB

The main advantage of trading using opposite Generic Sweden and DevPort AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generic Sweden position performs unexpectedly, DevPort 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 DevPort AB will offset losses from the drop in DevPort AB's long position.
The idea behind Generic Sweden publ and DevPort AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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