Correlation Between Hufvudstaden and Mekonomen
Can any of the company-specific risk be diversified away by investing in both Hufvudstaden and Mekonomen 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 Mekonomen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hufvudstaden AB and Mekonomen AB, you can compare the effects of market volatilities on Hufvudstaden and Mekonomen 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 Mekonomen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hufvudstaden and Mekonomen.
Diversification Opportunities for Hufvudstaden and Mekonomen
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hufvudstaden and Mekonomen is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hufvudstaden AB and Mekonomen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekonomen 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 Mekonomen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekonomen AB has no effect on the direction of Hufvudstaden i.e., Hufvudstaden and Mekonomen go up and down completely randomly.
Pair Corralation between Hufvudstaden and Mekonomen
Assuming the 90 days trading horizon Hufvudstaden AB is expected to generate 0.83 times more return on investment than Mekonomen. However, Hufvudstaden AB is 1.21 times less risky than Mekonomen. It trades about 0.01 of its potential returns per unit of risk. Mekonomen AB is currently generating about -0.16 per unit of risk. If you would invest 12,560 in Hufvudstaden AB on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Hufvudstaden AB or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hufvudstaden AB vs. Mekonomen AB
Performance |
| Timeline |
| Hufvudstaden AB |
| Mekonomen AB |
Hufvudstaden and Mekonomen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hufvudstaden and Mekonomen
The main advantage of trading using opposite Hufvudstaden and Mekonomen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hufvudstaden position performs unexpectedly, Mekonomen 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 Mekonomen will offset losses from the drop in Mekonomen's long position.| Hufvudstaden vs. Fabege AB | Hufvudstaden vs. Castellum AB | Hufvudstaden vs. Wallenstam AB | Hufvudstaden vs. Fastighets AB Balder |
| Mekonomen vs. NetJobs Group AB | Mekonomen vs. Mantex AB | Mekonomen vs. Doxa AB | Mekonomen vs. Clean Motion 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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