Correlation Between Karolinska Development and Elekta AB
Can any of the company-specific risk be diversified away by investing in both Karolinska Development and Elekta 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 Karolinska Development and Elekta AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karolinska Development AB and Elekta AB, you can compare the effects of market volatilities on Karolinska Development and Elekta 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 Karolinska Development with a short position of Elekta AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karolinska Development and Elekta AB.
Diversification Opportunities for Karolinska Development and Elekta AB
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Karolinska and Elekta is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Karolinska Development AB and Elekta AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elekta AB and Karolinska Development 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 Karolinska Development AB are associated (or correlated) with Elekta AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elekta AB has no effect on the direction of Karolinska Development i.e., Karolinska Development and Elekta AB go up and down completely randomly.
Pair Corralation between Karolinska Development and Elekta AB
Assuming the 90 days trading horizon Karolinska Development AB is expected to under-perform the Elekta AB. In addition to that, Karolinska Development is 1.19 times more volatile than Elekta AB. It trades about -0.04 of its total potential returns per unit of risk. Elekta AB is currently generating about -0.02 per unit of volatility. If you would invest 8,051 in Elekta AB on November 28, 2024 and sell it today you would lose (2,021) from holding Elekta AB or give up 25.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Karolinska Development AB vs. Elekta AB
Performance |
| Timeline |
| Karolinska Development |
| Elekta AB |
Karolinska Development and Elekta AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karolinska Development and Elekta AB
The main advantage of trading using opposite Karolinska Development and Elekta AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karolinska Development position performs unexpectedly, Elekta 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 Elekta AB will offset losses from the drop in Elekta AB's long position.| Karolinska Development vs. Oncopeptides AB | Karolinska Development vs. Cantargia AB | Karolinska Development vs. BioInvent International AB | Karolinska Development vs. Moberg Pharma AB |
| Elekta AB vs. Getinge AB ser | Elekta AB vs. AB SKF | Elekta AB vs. ASSA ABLOY AB | Elekta AB vs. Husqvarna 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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