Correlation Between Holmen AB and Alzinova
Can any of the company-specific risk be diversified away by investing in both Holmen AB and Alzinova 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 Holmen AB and Alzinova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB and Alzinova AB, you can compare the effects of market volatilities on Holmen AB and Alzinova 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 Holmen AB with a short position of Alzinova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and Alzinova.
Diversification Opportunities for Holmen AB and Alzinova
Very good diversification
The 3 months correlation between Holmen and Alzinova is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB and Alzinova AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alzinova AB and Holmen AB 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 Holmen AB are associated (or correlated) with Alzinova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alzinova AB has no effect on the direction of Holmen AB i.e., Holmen AB and Alzinova go up and down completely randomly.
Pair Corralation between Holmen AB and Alzinova
Assuming the 90 days trading horizon Holmen AB is expected to under-perform the Alzinova. But the stock apears to be less risky and, when comparing its historical volatility, Holmen AB is 2.26 times less risky than Alzinova. The stock trades about -0.02 of its potential returns per unit of risk. The Alzinova AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 388.00 in Alzinova AB on August 29, 2024 and sell it today you would lose (6.00) from holding Alzinova AB or give up 1.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holmen AB vs. Alzinova AB
Performance |
| Timeline |
| Holmen AB |
| Alzinova AB |
Holmen AB and Alzinova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and Alzinova
The main advantage of trading using opposite Holmen AB and Alzinova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB position performs unexpectedly, Alzinova 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 Alzinova will offset losses from the drop in Alzinova's long position.| Holmen AB vs. Holmen AB | Holmen AB vs. Tele2 AB | Holmen AB vs. Stora Enso Oyj | Holmen AB vs. BillerudKorsnas AB |
| Alzinova vs. AlzeCure Pharma | Alzinova vs. BioArctic AB | Alzinova vs. Cantargia AB | Alzinova vs. Diamyd Medical 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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