Correlation Between Hufvudstaden and Lipum AB
Can any of the company-specific risk be diversified away by investing in both Hufvudstaden and Lipum 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 Hufvudstaden and Lipum AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hufvudstaden AB and Lipum AB, you can compare the effects of market volatilities on Hufvudstaden and Lipum 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 Hufvudstaden with a short position of Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hufvudstaden and Lipum AB.
Diversification Opportunities for Hufvudstaden and Lipum AB
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hufvudstaden and Lipum is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Hufvudstaden AB and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum 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 Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Hufvudstaden i.e., Hufvudstaden and Lipum AB go up and down completely randomly.
Pair Corralation between Hufvudstaden and Lipum AB
Assuming the 90 days trading horizon Hufvudstaden is expected to generate 59.82 times less return on investment than Lipum AB. But when comparing it to its historical volatility, Hufvudstaden AB is 3.73 times less risky than Lipum AB. It trades about 0.02 of its potential returns per unit of risk. Lipum AB is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,440 in Lipum AB on November 27, 2024 and sell it today you would earn a total of 340.00 from holding Lipum AB or generate 23.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hufvudstaden AB vs. Lipum AB
Performance |
| Timeline |
| Hufvudstaden AB |
| Lipum AB |
Hufvudstaden and Lipum AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hufvudstaden and Lipum AB
The main advantage of trading using opposite Hufvudstaden and Lipum AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hufvudstaden position performs unexpectedly, Lipum 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 Lipum AB will offset losses from the drop in Lipum AB's long position.| Hufvudstaden vs. Fabege AB | Hufvudstaden vs. Castellum AB | Hufvudstaden vs. Wallenstam AB | Hufvudstaden vs. Fastighets AB Balder |
| Lipum AB vs. Vicore Pharma Holding | Lipum AB vs. Enorama Pharma AB | Lipum AB vs. Xintela AB | Lipum AB vs. Alzinova 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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