Correlation Between Holmen AB and Lipidor Ab
Can any of the company-specific risk be diversified away by investing in both Holmen AB and Lipidor 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 Holmen AB and Lipidor Ab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB and Lipidor Ab, you can compare the effects of market volatilities on Holmen AB and Lipidor 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 Holmen AB with a short position of Lipidor Ab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and Lipidor Ab.
Diversification Opportunities for Holmen AB and Lipidor Ab
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Holmen and Lipidor is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB and Lipidor Ab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipidor 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 Lipidor Ab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipidor Ab has no effect on the direction of Holmen AB i.e., Holmen AB and Lipidor Ab go up and down completely randomly.
Pair Corralation between Holmen AB and Lipidor Ab
Assuming the 90 days trading horizon Holmen AB is expected to under-perform the Lipidor Ab. But the stock apears to be less risky and, when comparing its historical volatility, Holmen AB is 4.79 times less risky than Lipidor Ab. The stock trades about -0.13 of its potential returns per unit of risk. The Lipidor Ab is currently generating about 0.74 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Lipidor Ab on October 12, 2024 and sell it today you would earn a total of 15.00 from holding Lipidor Ab or generate 88.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holmen AB vs. Lipidor Ab
Performance |
| Timeline |
| Holmen AB |
| Lipidor Ab |
Holmen AB and Lipidor Ab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and Lipidor Ab
The main advantage of trading using opposite Holmen AB and Lipidor Ab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB position performs unexpectedly, Lipidor 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 Lipidor Ab will offset losses from the drop in Lipidor Ab's long position.| Holmen AB vs. Svenska Cellulosa Aktiebolaget | Holmen AB vs. BillerudKorsnas AB | Holmen AB vs. Boliden AB | Holmen AB vs. Husqvarna AB |
| Lipidor Ab vs. BioInvent International AB | Lipidor Ab vs. Hansa Biopharma AB | Lipidor Ab vs. ExpreS2ion Biotech Holding | Lipidor Ab vs. Saniona 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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