Correlation Between Hufvudstaden and CARSALESCOM
Can any of the company-specific risk be diversified away by investing in both Hufvudstaden and CARSALESCOM 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 Hufvudstaden and CARSALESCOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hufvudstaden AB and CARSALESCOM, you can compare the effects of market volatilities on Hufvudstaden and CARSALESCOM 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 Hufvudstaden with a short position of CARSALESCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hufvudstaden and CARSALESCOM.
Diversification Opportunities for Hufvudstaden and CARSALESCOM
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hufvudstaden and CARSALESCOM is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hufvudstaden AB and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM and Hufvudstaden 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 Hufvudstaden AB are associated (or correlated) with CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Hufvudstaden i.e., Hufvudstaden and CARSALESCOM go up and down completely randomly.
Pair Corralation between Hufvudstaden and CARSALESCOM
Assuming the 90 days trading horizon Hufvudstaden is expected to generate 1.63 times less return on investment than CARSALESCOM. In addition to that, Hufvudstaden is 1.57 times more volatile than CARSALESCOM. It trades about 0.04 of its total potential returns per unit of risk. CARSALESCOM is currently generating about 0.09 per unit of volatility. If you would invest 1,209 in CARSALESCOM on September 13, 2024 and sell it today you would earn a total of 1,151 from holding CARSALESCOM or generate 95.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hufvudstaden AB vs. CARSALESCOM
Performance |
| Timeline |
| Hufvudstaden AB |
| CARSALESCOM |
Hufvudstaden and CARSALESCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hufvudstaden and CARSALESCOM
The main advantage of trading using opposite Hufvudstaden and CARSALESCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hufvudstaden position performs unexpectedly, CARSALESCOM 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 CARSALESCOM will offset losses from the drop in CARSALESCOM's long position.| Hufvudstaden vs. CARSALESCOM | Hufvudstaden vs. Salesforce | Hufvudstaden vs. CeoTronics AG | Hufvudstaden vs. CarsalesCom |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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