Correlation Between Holmen AB and COOR Service
Can any of the company-specific risk be diversified away by investing in both Holmen AB and COOR Service 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 COOR Service into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB and COOR Service Management, you can compare the effects of market volatilities on Holmen AB and COOR Service 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 COOR Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and COOR Service.
Diversification Opportunities for Holmen AB and COOR Service
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Holmen and COOR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB and COOR Service Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COOR Service Management 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 COOR Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COOR Service Management has no effect on the direction of Holmen AB i.e., Holmen AB and COOR Service go up and down completely randomly.
Pair Corralation between Holmen AB and COOR Service
Assuming the 90 days trading horizon Holmen AB is expected to generate 0.52 times more return on investment than COOR Service. However, Holmen AB is 1.92 times less risky than COOR Service. It trades about -0.03 of its potential returns per unit of risk. COOR Service Management is currently generating about -0.26 per unit of risk. If you would invest 40,800 in Holmen AB on September 1, 2024 and sell it today you would lose (300.00) from holding Holmen AB or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holmen AB vs. COOR Service Management
Performance |
| Timeline |
| Holmen AB |
| COOR Service Management |
Holmen AB and COOR Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and COOR Service
The main advantage of trading using opposite Holmen AB and COOR Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB position performs unexpectedly, COOR Service 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 COOR Service will offset losses from the drop in COOR Service's long position.| Holmen AB vs. Holmen AB | Holmen AB vs. Tele2 AB | Holmen AB vs. Stora Enso Oyj | Holmen AB vs. BillerudKorsnas AB |
| COOR Service vs. Samhllsbyggnadsbolaget i Norden | COOR Service vs. Sinch AB | COOR Service vs. Embracer Group AB | COOR Service vs. Evolution 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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