Correlation Between Generic Sweden and Diadrom Holding
Can any of the company-specific risk be diversified away by investing in both Generic Sweden and Diadrom Holding 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 Diadrom Holding 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 Diadrom Holding AB, you can compare the effects of market volatilities on Generic Sweden and Diadrom Holding 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 Diadrom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Sweden and Diadrom Holding.
Diversification Opportunities for Generic Sweden and Diadrom Holding
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Generic and Diadrom is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Generic Sweden publ and Diadrom Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diadrom Holding 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 Diadrom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diadrom Holding AB has no effect on the direction of Generic Sweden i.e., Generic Sweden and Diadrom Holding go up and down completely randomly.
Pair Corralation between Generic Sweden and Diadrom Holding
Assuming the 90 days trading horizon Generic Sweden publ is expected to generate 0.92 times more return on investment than Diadrom Holding. However, Generic Sweden publ is 1.08 times less risky than Diadrom Holding. It trades about 0.04 of its potential returns per unit of risk. Diadrom Holding AB is currently generating about -0.03 per unit of risk. If you would invest 3,456 in Generic Sweden publ on August 30, 2024 and sell it today you would earn a total of 1,684 from holding Generic Sweden publ or generate 48.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Generic Sweden publ vs. Diadrom Holding AB
Performance |
| Timeline |
| Generic Sweden publ |
| Diadrom Holding AB |
Generic Sweden and Diadrom Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Generic Sweden and Diadrom Holding
The main advantage of trading using opposite Generic Sweden and Diadrom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generic Sweden position performs unexpectedly, Diadrom Holding 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 Diadrom Holding will offset losses from the drop in Diadrom Holding's long position.| Generic Sweden vs. FormPipe Software AB | Generic Sweden vs. Novotek AB | Generic Sweden vs. Hanza AB | Generic Sweden vs. Genovis AB |
| Diadrom Holding vs. Generic Sweden publ | Diadrom Holding vs. Avensia publ AB | Diadrom Holding vs. Softronic AB | Diadrom Holding vs. Drillcon 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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