Correlation Between Holmen AB and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Holmen AB and Nexam Chemical 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 Nexam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB and Nexam Chemical Holding, you can compare the effects of market volatilities on Holmen AB and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and Nexam Chemical.
Diversification Opportunities for Holmen AB and Nexam Chemical
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Holmen and Nexam is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Holmen AB i.e., Holmen AB and Nexam Chemical go up and down completely randomly.
Pair Corralation between Holmen AB and Nexam Chemical
Assuming the 90 days trading horizon Holmen AB is expected to under-perform the Nexam Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Holmen AB is 2.41 times less risky than Nexam Chemical. The stock trades about -0.14 of its potential returns per unit of risk. The Nexam Chemical Holding is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 401.00 in Nexam Chemical Holding on September 3, 2024 and sell it today you would lose (2.00) from holding Nexam Chemical Holding or give up 0.5% 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. Nexam Chemical Holding
Performance |
| Timeline |
| Holmen AB |
| Nexam Chemical Holding |
Holmen AB and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and Nexam Chemical
The main advantage of trading using opposite Holmen AB and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.| Holmen AB vs. Svenska Cellulosa Aktiebolaget | Holmen AB vs. BillerudKorsnas AB | Holmen AB vs. Boliden AB | Holmen AB vs. Husqvarna AB |
| Nexam Chemical vs. Auriant Mining AB | Nexam Chemical vs. aXichem AB | Nexam Chemical vs. Clean Motion AB | Nexam Chemical vs. KABE Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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