Correlation Between Generic Sweden and Prevas AB
Can any of the company-specific risk be diversified away by investing in both Generic Sweden and Prevas 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 Prevas 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 Prevas AB, you can compare the effects of market volatilities on Generic Sweden and Prevas 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 Prevas AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Sweden and Prevas AB.
Diversification Opportunities for Generic Sweden and Prevas AB
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Generic and Prevas is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Generic Sweden publ and Prevas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prevas 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 Prevas AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prevas AB has no effect on the direction of Generic Sweden i.e., Generic Sweden and Prevas AB go up and down completely randomly.
Pair Corralation between Generic Sweden and Prevas AB
Assuming the 90 days trading horizon Generic Sweden publ is expected to generate 1.41 times more return on investment than Prevas AB. However, Generic Sweden is 1.41 times more volatile than Prevas AB. It trades about 0.18 of its potential returns per unit of risk. Prevas AB is currently generating about 0.01 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 Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Generic Sweden publ vs. Prevas AB
Performance |
| Timeline |
| Generic Sweden publ |
| Prevas AB |
Generic Sweden and Prevas AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Generic Sweden and Prevas AB
The main advantage of trading using opposite Generic Sweden and Prevas AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generic Sweden position performs unexpectedly, Prevas 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 Prevas AB will offset losses from the drop in Prevas AB's long position.| Generic Sweden vs. Enea AB | Generic Sweden vs. Novotek AB | Generic Sweden vs. Addnode Group AB | Generic Sweden vs. Softronic AB |
| Prevas AB vs. Softronic AB | Prevas AB vs. Novotek AB | Prevas AB vs. Svedbergs i Dalstorp | Prevas AB vs. Know IT 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |