Correlation Between Generic Sweden and Drillcon
Can any of the company-specific risk be diversified away by investing in both Generic Sweden and Drillcon 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 Drillcon 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 Drillcon AB, you can compare the effects of market volatilities on Generic Sweden and Drillcon 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 Drillcon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Sweden and Drillcon.
Diversification Opportunities for Generic Sweden and Drillcon
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Generic and Drillcon is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Generic Sweden publ and Drillcon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drillcon 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 Drillcon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drillcon AB has no effect on the direction of Generic Sweden i.e., Generic Sweden and Drillcon go up and down completely randomly.
Pair Corralation between Generic Sweden and Drillcon
Assuming the 90 days trading horizon Generic Sweden publ is expected to generate 0.65 times more return on investment than Drillcon. However, Generic Sweden publ is 1.55 times less risky than Drillcon. It trades about 0.01 of its potential returns per unit of risk. Drillcon AB is currently generating about -0.06 per unit of risk. If you would invest 4,940 in Generic Sweden publ on September 1, 2024 and sell it today you would lose (30.00) from holding Generic Sweden publ or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Generic Sweden publ vs. Drillcon AB
Performance |
| Timeline |
| Generic Sweden publ |
| Drillcon AB |
Generic Sweden and Drillcon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Generic Sweden and Drillcon
The main advantage of trading using opposite Generic Sweden and Drillcon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generic Sweden position performs unexpectedly, Drillcon 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 Drillcon will offset losses from the drop in Drillcon's long position.| Generic Sweden vs. Enea AB | Generic Sweden vs. Novotek AB | Generic Sweden vs. Addnode Group AB | Generic Sweden vs. Softronic AB |
| Drillcon vs. Holmen AB | Drillcon vs. Svenska Cellulosa Aktiebolaget | Drillcon vs. Husqvarna AB | Drillcon vs. Alfa Laval 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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