Correlation Between Investor and White Pearl
Can any of the company-specific risk be diversified away by investing in both Investor and White Pearl 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 White Pearl 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 White Pearl Technology, you can compare the effects of market volatilities on Investor and White Pearl 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 White Pearl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and White Pearl.
Diversification Opportunities for Investor and White Pearl
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Investor and White is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and White Pearl Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Pearl Technology 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 White Pearl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Pearl Technology has no effect on the direction of Investor i.e., Investor and White Pearl go up and down completely randomly.
Pair Corralation between Investor and White Pearl
Assuming the 90 days trading horizon Investor AB ser is expected to generate 0.21 times more return on investment than White Pearl. However, Investor AB ser is 4.82 times less risky than White Pearl. It trades about 0.16 of its potential returns per unit of risk. White Pearl Technology is currently generating about 0.03 per unit of risk. If you would invest 19,558 in Investor AB ser on August 25, 2024 and sell it today you would earn a total of 10,052 from holding Investor AB ser or generate 51.4% 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. White Pearl Technology
Performance |
| Timeline |
| Investor AB ser |
| White Pearl Technology |
Investor and White Pearl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and White Pearl
The main advantage of trading using opposite Investor and White Pearl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, White Pearl 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 White Pearl will offset losses from the drop in White Pearl's long position.| Investor vs. Norva24 Group AB | Investor vs. KABE Group AB | Investor vs. IAR Systems Group | Investor vs. Clinical Laserthermia Systems |
| White Pearl vs. AstraZeneca PLC | White Pearl vs. Investor AB ser | White Pearl vs. Investor AB ser | White Pearl vs. Atlas Copco 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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