Correlation Between Indutrade and Dometic Group
Can any of the company-specific risk be diversified away by investing in both Indutrade and Dometic Group 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 Indutrade and Dometic Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and Dometic Group AB, you can compare the effects of market volatilities on Indutrade and Dometic Group 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 Indutrade with a short position of Dometic Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and Dometic Group.
Diversification Opportunities for Indutrade and Dometic Group
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indutrade and Dometic is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Dometic Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dometic Group AB and Indutrade 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 Indutrade AB are associated (or correlated) with Dometic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dometic Group AB has no effect on the direction of Indutrade i.e., Indutrade and Dometic Group go up and down completely randomly.
Pair Corralation between Indutrade and Dometic Group
Assuming the 90 days trading horizon Indutrade AB is expected to generate 0.85 times more return on investment than Dometic Group. However, Indutrade AB is 1.18 times less risky than Dometic Group. It trades about 0.02 of its potential returns per unit of risk. Dometic Group AB is currently generating about -0.07 per unit of risk. If you would invest 26,820 in Indutrade AB on September 1, 2024 and sell it today you would earn a total of 1,020 from holding Indutrade AB or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indutrade AB vs. Dometic Group AB
Performance |
| Timeline |
| Indutrade AB |
| Dometic Group AB |
Indutrade and Dometic Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and Dometic Group
The main advantage of trading using opposite Indutrade and Dometic Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade position performs unexpectedly, Dometic Group 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 Dometic Group will offset losses from the drop in Dometic Group's long position.| Indutrade vs. Lifco AB | Indutrade vs. Addtech AB | Indutrade vs. NIBE Industrier AB | Indutrade vs. Investment AB Latour |
| Dometic Group vs. AB SKF | Dometic Group vs. Tele2 AB | Dometic Group vs. Sandvik AB | Dometic Group vs. Skanska 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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