Correlation Between Husqvarna and Trelleborg
Can any of the company-specific risk be diversified away by investing in both Husqvarna and Trelleborg 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 Trelleborg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husqvarna AB and Trelleborg AB, you can compare the effects of market volatilities on Husqvarna and Trelleborg 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 Trelleborg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husqvarna and Trelleborg.
Diversification Opportunities for Husqvarna and Trelleborg
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Husqvarna and Trelleborg is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna AB and Trelleborg AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trelleborg 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 Trelleborg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trelleborg AB has no effect on the direction of Husqvarna i.e., Husqvarna and Trelleborg go up and down completely randomly.
Pair Corralation between Husqvarna and Trelleborg
Assuming the 90 days trading horizon Husqvarna AB is expected to under-perform the Trelleborg. In addition to that, Husqvarna is 1.3 times more volatile than Trelleborg AB. It trades about -0.04 of its total potential returns per unit of risk. Trelleborg AB is currently generating about 0.03 per unit of volatility. If you would invest 31,964 in Trelleborg AB on August 24, 2024 and sell it today you would earn a total of 3,096 from holding Trelleborg AB or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Husqvarna AB vs. Trelleborg AB
Performance |
| Timeline |
| Husqvarna AB |
| Trelleborg AB |
Husqvarna and Trelleborg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husqvarna and Trelleborg
The main advantage of trading using opposite Husqvarna and Trelleborg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husqvarna position performs unexpectedly, Trelleborg 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 Trelleborg will offset losses from the drop in Trelleborg's long position.| Husqvarna vs. AB Electrolux | Husqvarna vs. Stora Enso Oyj | Husqvarna vs. Industrivarden AB ser | Husqvarna vs. Holmen AB |
| Trelleborg vs. Atlas Copco AB | Trelleborg vs. Atlas Copco AB | Trelleborg vs. Troax Group AB | Trelleborg vs. OptiCept Technologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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