Correlation Between Hufvudstaden and FastPartner
Can any of the company-specific risk be diversified away by investing in both Hufvudstaden and FastPartner 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 FastPartner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hufvudstaden AB and FastPartner AB, you can compare the effects of market volatilities on Hufvudstaden and FastPartner 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 FastPartner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hufvudstaden and FastPartner.
Diversification Opportunities for Hufvudstaden and FastPartner
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hufvudstaden and FastPartner is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hufvudstaden AB and FastPartner AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FastPartner 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 FastPartner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FastPartner AB has no effect on the direction of Hufvudstaden i.e., Hufvudstaden and FastPartner go up and down completely randomly.
Pair Corralation between Hufvudstaden and FastPartner
Assuming the 90 days trading horizon Hufvudstaden AB is expected to generate 0.82 times more return on investment than FastPartner. However, Hufvudstaden AB is 1.21 times less risky than FastPartner. It trades about -0.18 of its potential returns per unit of risk. FastPartner AB is currently generating about -0.29 per unit of risk. If you would invest 12,920 in Hufvudstaden AB on August 29, 2024 and sell it today you would lose (670.00) from holding Hufvudstaden AB or give up 5.19% 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. FastPartner AB
Performance |
| Timeline |
| Hufvudstaden AB |
| FastPartner AB |
Hufvudstaden and FastPartner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hufvudstaden and FastPartner
The main advantage of trading using opposite Hufvudstaden and FastPartner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hufvudstaden position performs unexpectedly, FastPartner 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 FastPartner will offset losses from the drop in FastPartner's long position.| Hufvudstaden vs. FastPartner AB | Hufvudstaden vs. ALM Equity AB | Hufvudstaden vs. KABE Group AB | Hufvudstaden vs. IAR Systems Group |
| FastPartner vs. Hufvudstaden AB | FastPartner vs. ALM Equity AB | FastPartner vs. KABE Group AB | FastPartner vs. IAR Systems Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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