Correlation Between Industrivarden and Ratos AB
Can any of the company-specific risk be diversified away by investing in both Industrivarden and Ratos 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 Industrivarden and Ratos AB 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 Ratos AB, you can compare the effects of market volatilities on Industrivarden and Ratos 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 Industrivarden with a short position of Ratos AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrivarden and Ratos AB.
Diversification Opportunities for Industrivarden and Ratos AB
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Industrivarden and Ratos is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and Ratos AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratos 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 Ratos AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratos AB has no effect on the direction of Industrivarden i.e., Industrivarden and Ratos AB go up and down completely randomly.
Pair Corralation between Industrivarden and Ratos AB
Assuming the 90 days trading horizon Industrivarden is expected to generate 1.89 times less return on investment than Ratos AB. But when comparing it to its historical volatility, Industrivarden AB ser is 2.06 times less risky than Ratos AB. It trades about 0.3 of its potential returns per unit of risk. Ratos AB is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 3,400 in Ratos AB on December 4, 2024 and sell it today you would earn a total of 382.00 from holding Ratos AB or generate 11.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrivarden AB ser vs. Ratos AB
Performance |
| Timeline |
| Industrivarden AB ser |
| Ratos AB |
Industrivarden and Ratos AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrivarden and Ratos AB
The main advantage of trading using opposite Industrivarden and Ratos AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrivarden position performs unexpectedly, Ratos 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 Ratos AB will offset losses from the drop in Ratos AB's long position.| Industrivarden vs. Investor AB ser | Industrivarden vs. L E Lundbergfretagen | Industrivarden vs. Kinnevik Investment AB | Industrivarden vs. Investment AB Latour |
| Ratos AB vs. Kinnevik Investment AB | Ratos AB vs. L E Lundbergfretagen | Ratos AB vs. Investment AB Latour | Ratos AB vs. Industrivarden AB ser |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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