Correlation Between Industrivarden and Husqvarna
Can any of the company-specific risk be diversified away by investing in both Industrivarden and Husqvarna 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 Industrivarden and Husqvarna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrivarden AB ser and Husqvarna AB, you can compare the effects of market volatilities on Industrivarden and Husqvarna 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 Industrivarden with a short position of Husqvarna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrivarden and Husqvarna.
Diversification Opportunities for Industrivarden and Husqvarna
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Industrivarden and Husqvarna is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and Husqvarna AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husqvarna AB and Industrivarden 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 Industrivarden AB ser are associated (or correlated) with Husqvarna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husqvarna AB has no effect on the direction of Industrivarden i.e., Industrivarden and Husqvarna go up and down completely randomly.
Pair Corralation between Industrivarden and Husqvarna
Assuming the 90 days trading horizon Industrivarden AB ser is expected to generate 0.74 times more return on investment than Husqvarna. However, Industrivarden AB ser is 1.36 times less risky than Husqvarna. It trades about -0.12 of its potential returns per unit of risk. Husqvarna AB is currently generating about -0.37 per unit of risk. If you would invest 37,440 in Industrivarden AB ser on August 28, 2024 and sell it today you would lose (1,240) from holding Industrivarden AB ser or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrivarden AB ser vs. Husqvarna AB
Performance |
| Timeline |
| Industrivarden AB ser |
| Husqvarna AB |
Industrivarden and Husqvarna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrivarden and Husqvarna
The main advantage of trading using opposite Industrivarden and Husqvarna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrivarden position performs unexpectedly, Husqvarna 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 Husqvarna will offset losses from the drop in Husqvarna's long position.| Industrivarden vs. Norva24 Group AB | Industrivarden vs. KABE Group AB | Industrivarden vs. IAR Systems Group | Industrivarden vs. Clinical Laserthermia Systems |
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 Stocks Directory module to find actively traded stocks across global markets.
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