Correlation Between Investor and AB Traction
Can any of the company-specific risk be diversified away by investing in both Investor and AB Traction 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 AB Traction 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 AB Traction, you can compare the effects of market volatilities on Investor and AB Traction 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 AB Traction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and AB Traction.
Diversification Opportunities for Investor and AB Traction
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Investor and TRAC-B is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and AB Traction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Traction 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 AB Traction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Traction has no effect on the direction of Investor i.e., Investor and AB Traction go up and down completely randomly.
Pair Corralation between Investor and AB Traction
Assuming the 90 days trading horizon Investor AB ser is expected to generate 0.76 times more return on investment than AB Traction. However, Investor AB ser is 1.32 times less risky than AB Traction. It trades about 0.09 of its potential returns per unit of risk. AB Traction is currently generating about 0.03 per unit of risk. If you would invest 25,870 in Investor AB ser on September 3, 2024 and sell it today you would earn a total of 4,055 from holding Investor AB ser or generate 15.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investor AB ser vs. AB Traction
Performance |
| Timeline |
| Investor AB ser |
| AB Traction |
Investor and AB Traction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and AB Traction
The main advantage of trading using opposite Investor and AB Traction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, AB Traction 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 AB Traction will offset losses from the drop in AB Traction's long position.| Investor vs. Kinnevik Investment AB | Investor vs. Investment AB Latour | Investor vs. Samhllsbyggnadsbolaget i Norden | Investor vs. Industrivarden AB ser |
| AB Traction vs. Svolder AB | AB Traction vs. Investment AB Oresund | AB Traction vs. L E Lundbergfretagen | AB Traction vs. Creades 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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