Correlation Between Investor and NOTE AB
Can any of the company-specific risk be diversified away by investing in both Investor and NOTE 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 Investor and NOTE AB 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 NOTE AB, you can compare the effects of market volatilities on Investor and NOTE 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 Investor with a short position of NOTE AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and NOTE AB.
Diversification Opportunities for Investor and NOTE AB
Very good diversification
The 3 months correlation between Investor and NOTE is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and NOTE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOTE 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 NOTE AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOTE AB has no effect on the direction of Investor i.e., Investor and NOTE AB go up and down completely randomly.
Pair Corralation between Investor and NOTE AB
Assuming the 90 days trading horizon Investor AB ser is expected to generate 0.37 times more return on investment than NOTE AB. However, Investor AB ser is 2.7 times less risky than NOTE AB. It trades about 0.1 of its potential returns per unit of risk. NOTE AB is currently generating about -0.05 per unit of risk. If you would invest 21,371 in Investor AB ser on August 31, 2024 and sell it today you would earn a total of 8,554 from holding Investor AB ser or generate 40.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investor AB ser vs. NOTE AB
Performance |
| Timeline |
| Investor AB ser |
| NOTE AB |
Investor and NOTE AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and NOTE AB
The main advantage of trading using opposite Investor and NOTE AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, NOTE 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 NOTE AB will offset losses from the drop in NOTE AB's long position.| Investor vs. Kinnevik Investment AB | Investor vs. Investment AB Latour | Investor vs. Samhllsbyggnadsbolaget i Norden | Investor vs. Industrivarden AB ser |
| NOTE AB vs. Nordea Bank Abp | NOTE AB vs. Qleanair Holding AB | NOTE AB vs. Train Alliance Sweden | NOTE AB vs. SaveLend Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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