Correlation Between Investor and 24SevenOffice Scandinavia
Can any of the company-specific risk be diversified away by investing in both Investor and 24SevenOffice Scandinavia 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 Investor and 24SevenOffice Scandinavia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB ser and 24SevenOffice Scandinavia AB, you can compare the effects of market volatilities on Investor and 24SevenOffice Scandinavia 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 Investor with a short position of 24SevenOffice Scandinavia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and 24SevenOffice Scandinavia.
Diversification Opportunities for Investor and 24SevenOffice Scandinavia
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investor and 24SevenOffice is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and 24SevenOffice Scandinavia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 24SevenOffice Scandinavia and Investor 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 Investor AB ser are associated (or correlated) with 24SevenOffice Scandinavia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 24SevenOffice Scandinavia has no effect on the direction of Investor i.e., Investor and 24SevenOffice Scandinavia go up and down completely randomly.
Pair Corralation between Investor and 24SevenOffice Scandinavia
Assuming the 90 days trading horizon Investor is expected to generate 3.33 times less return on investment than 24SevenOffice Scandinavia. But when comparing it to its historical volatility, Investor AB ser is 1.45 times less risky than 24SevenOffice Scandinavia. It trades about 0.14 of its potential returns per unit of risk. 24SevenOffice Scandinavia AB is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,775 in 24SevenOffice Scandinavia AB on November 7, 2024 and sell it today you would earn a total of 220.00 from holding 24SevenOffice Scandinavia AB or generate 12.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investor AB ser vs. 24SevenOffice Scandinavia AB
Performance |
| Timeline |
| Investor AB ser |
| 24SevenOffice Scandinavia |
Investor and 24SevenOffice Scandinavia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and 24SevenOffice Scandinavia
The main advantage of trading using opposite Investor and 24SevenOffice Scandinavia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, 24SevenOffice Scandinavia 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 24SevenOffice Scandinavia will offset losses from the drop in 24SevenOffice Scandinavia's long position.| Investor vs. Kinnevik Investment AB | Investor vs. Investor AB ser | Investor vs. Sinch AB | Investor vs. Vef AB |
| 24SevenOffice Scandinavia vs. Catena Media plc | 24SevenOffice Scandinavia vs. Vitec Software Group | 24SevenOffice Scandinavia vs. Media and Games | 24SevenOffice Scandinavia vs. SaltX Technology Holding |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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