Correlation Between Investor and Polygiene
Can any of the company-specific risk be diversified away by investing in both Investor and Polygiene 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 Polygiene 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 Polygiene AB, you can compare the effects of market volatilities on Investor and Polygiene 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 Polygiene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Polygiene.
Diversification Opportunities for Investor and Polygiene
Very good diversification
The 3 months correlation between Investor and Polygiene is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Polygiene AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygiene AB 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 Polygiene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygiene AB has no effect on the direction of Investor i.e., Investor and Polygiene go up and down completely randomly.
Pair Corralation between Investor and Polygiene
Assuming the 90 days trading horizon Investor is expected to generate 8.79 times less return on investment than Polygiene. But when comparing it to its historical volatility, Investor AB ser is 3.93 times less risky than Polygiene. It trades about 0.03 of its potential returns per unit of risk. Polygiene AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 928.00 in Polygiene AB on August 24, 2024 and sell it today you would earn a total of 272.00 from holding Polygiene AB or generate 29.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investor AB ser vs. Polygiene AB
Performance |
| Timeline |
| Investor AB ser |
| Polygiene AB |
Investor and Polygiene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and Polygiene
The main advantage of trading using opposite Investor and Polygiene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, Polygiene 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 Polygiene will offset losses from the drop in Polygiene's long position.| Investor vs. Investor AB ser | Investor vs. Industrivarden AB ser | Investor vs. Investment AB Latour | Investor vs. Kinnevik Investment AB |
| Polygiene vs. G5 Entertainment publ | Polygiene vs. Nexam Chemical Holding | Polygiene vs. Swedencare publ AB | Polygiene vs. Genovis 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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