Correlation Between JM AB and FM Mattsson
Can any of the company-specific risk be diversified away by investing in both JM AB and FM Mattsson 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 JM AB and FM Mattsson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JM AB and FM Mattsson Mora, you can compare the effects of market volatilities on JM AB and FM Mattsson 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 JM AB with a short position of FM Mattsson. Check out your portfolio center. Please also check ongoing floating volatility patterns of JM AB and FM Mattsson.
Diversification Opportunities for JM AB and FM Mattsson
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between JM AB and FMM-B is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding JM AB and FM Mattsson Mora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FM Mattsson Mora and JM AB 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 JM AB are associated (or correlated) with FM Mattsson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FM Mattsson Mora has no effect on the direction of JM AB i.e., JM AB and FM Mattsson go up and down completely randomly.
Pair Corralation between JM AB and FM Mattsson
Assuming the 90 days horizon JM AB is expected to generate 2.31 times less return on investment than FM Mattsson. But when comparing it to its historical volatility, JM AB is 1.39 times less risky than FM Mattsson. It trades about 0.05 of its potential returns per unit of risk. FM Mattsson Mora is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,962 in FM Mattsson Mora on August 26, 2024 and sell it today you would earn a total of 178.00 from holding FM Mattsson Mora or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JM AB vs. FM Mattsson Mora
Performance |
| Timeline |
| JM AB |
| FM Mattsson Mora |
JM AB and FM Mattsson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JM AB and FM Mattsson
The main advantage of trading using opposite JM AB and FM Mattsson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JM AB position performs unexpectedly, FM Mattsson 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 FM Mattsson will offset losses from the drop in FM Mattsson's long position.The idea behind JM AB and FM Mattsson Mora pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| FM Mattsson vs. Nordic Waterproofing Holding | FM Mattsson vs. Bufab Holding AB | FM Mattsson vs. Garo AB | FM Mattsson vs. Inwido 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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