Correlation Between Husqvarna and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Husqvarna and Axfood 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 Husqvarna and Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husqvarna AB and Axfood AB, you can compare the effects of market volatilities on Husqvarna and Axfood 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 Husqvarna with a short position of Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husqvarna and Axfood AB.
Diversification Opportunities for Husqvarna and Axfood AB
Very weak diversification
The 3 months correlation between Husqvarna and Axfood is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna AB and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB and Husqvarna 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 Husqvarna AB are associated (or correlated) with Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Husqvarna i.e., Husqvarna and Axfood AB go up and down completely randomly.
Pair Corralation between Husqvarna and Axfood AB
Assuming the 90 days trading horizon Husqvarna AB is expected to under-perform the Axfood AB. In addition to that, Husqvarna is 1.39 times more volatile than Axfood AB. It trades about -0.05 of its total potential returns per unit of risk. Axfood AB is currently generating about 0.02 per unit of volatility. If you would invest 22,050 in Axfood AB on October 23, 2024 and sell it today you would earn a total of 1,310 from holding Axfood AB or generate 5.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Husqvarna AB vs. Axfood AB
Performance |
| Timeline |
| Husqvarna AB |
| Axfood AB |
Husqvarna and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husqvarna and Axfood AB
The main advantage of trading using opposite Husqvarna and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husqvarna position performs unexpectedly, Axfood 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 Axfood AB will offset losses from the drop in Axfood AB's long position.The idea behind Husqvarna AB and Axfood AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Axfood AB vs. Castellum AB | Axfood AB vs. Tele2 AB | Axfood AB vs. Investor AB ser | Axfood AB vs. Kinnevik Investment 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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