Correlation Between Indutrade and Smart Eye
Can any of the company-specific risk be diversified away by investing in both Indutrade and Smart Eye 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 Smart Eye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and Smart Eye AB, you can compare the effects of market volatilities on Indutrade and Smart Eye 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 Smart Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and Smart Eye.
Diversification Opportunities for Indutrade and Smart Eye
Poor diversification
The 3 months correlation between Indutrade and Smart is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Smart Eye AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Eye 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 Smart Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Eye AB has no effect on the direction of Indutrade i.e., Indutrade and Smart Eye go up and down completely randomly.
Pair Corralation between Indutrade and Smart Eye
Assuming the 90 days trading horizon Indutrade AB is expected to under-perform the Smart Eye. But the stock apears to be less risky and, when comparing its historical volatility, Indutrade AB is 2.42 times less risky than Smart Eye. The stock trades about -0.27 of its potential returns per unit of risk. The Smart Eye AB is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 6,670 in Smart Eye AB on August 28, 2024 and sell it today you would lose (530.00) from holding Smart Eye AB or give up 7.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indutrade AB vs. Smart Eye AB
Performance |
| Timeline |
| Indutrade AB |
| Smart Eye AB |
Indutrade and Smart Eye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and Smart Eye
The main advantage of trading using opposite Indutrade and Smart Eye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade position performs unexpectedly, Smart Eye 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 Smart Eye will offset losses from the drop in Smart Eye's long position.| Indutrade vs. Addtech AB | Indutrade vs. Teqnion AB | Indutrade vs. Vitec Software Group | Indutrade vs. Lagercrantz Group AB |
| Smart Eye vs. Lifco AB | Smart Eye vs. Lagercrantz Group AB | Smart Eye vs. Addtech AB | Smart Eye vs. Instalco Intressenter 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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