Correlation Between Hufvudstaden and Castellum
Can any of the company-specific risk be diversified away by investing in both Hufvudstaden and Castellum 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 Castellum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hufvudstaden AB and Castellum AB, you can compare the effects of market volatilities on Hufvudstaden and Castellum 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 Castellum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hufvudstaden and Castellum.
Diversification Opportunities for Hufvudstaden and Castellum
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hufvudstaden and Castellum is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hufvudstaden AB and Castellum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castellum AB 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 Castellum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castellum AB has no effect on the direction of Hufvudstaden i.e., Hufvudstaden and Castellum go up and down completely randomly.
Pair Corralation between Hufvudstaden and Castellum
Assuming the 90 days trading horizon Hufvudstaden AB is expected to generate 0.88 times more return on investment than Castellum. However, Hufvudstaden AB is 1.14 times less risky than Castellum. It trades about -0.07 of its potential returns per unit of risk. Castellum AB is currently generating about -0.08 per unit of risk. If you would invest 13,720 in Hufvudstaden AB on November 28, 2024 and sell it today you would lose (1,420) from holding Hufvudstaden AB or give up 10.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hufvudstaden AB vs. Castellum AB
Performance |
| Timeline |
| Hufvudstaden AB |
| Castellum AB |
Hufvudstaden and Castellum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hufvudstaden and Castellum
The main advantage of trading using opposite Hufvudstaden and Castellum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hufvudstaden position performs unexpectedly, Castellum 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 Castellum will offset losses from the drop in Castellum's long position.| Hufvudstaden vs. Fabege AB | Hufvudstaden vs. Castellum AB | Hufvudstaden vs. Wallenstam AB | Hufvudstaden vs. Fastighets AB Balder |
| Castellum vs. Fabege AB | Castellum vs. Samhllsbyggnadsbolaget i Norden | Castellum vs. Fastighets AB Balder | Castellum vs. Axfood 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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