Correlation Between Klimator and Arjo AB
Can any of the company-specific risk be diversified away by investing in both Klimator and Arjo 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 Klimator and Arjo AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Klimator AB and Arjo AB, you can compare the effects of market volatilities on Klimator and Arjo 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 Klimator with a short position of Arjo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klimator and Arjo AB.
Diversification Opportunities for Klimator and Arjo AB
Very good diversification
The 3 months correlation between Klimator and Arjo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Klimator AB and Arjo AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arjo AB and Klimator 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 Klimator AB are associated (or correlated) with Arjo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arjo AB has no effect on the direction of Klimator i.e., Klimator and Arjo AB go up and down completely randomly.
Pair Corralation between Klimator and Arjo AB
Assuming the 90 days trading horizon Klimator AB is expected to generate 1.42 times more return on investment than Arjo AB. However, Klimator is 1.42 times more volatile than Arjo AB. It trades about 0.08 of its potential returns per unit of risk. Arjo AB is currently generating about 0.0 per unit of risk. If you would invest 130.00 in Klimator AB on September 2, 2024 and sell it today you would earn a total of 78.00 from holding Klimator AB or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klimator AB vs. Arjo AB
Performance |
| Timeline |
| Klimator AB |
| Arjo AB |
Klimator and Arjo AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klimator and Arjo AB
The main advantage of trading using opposite Klimator and Arjo AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klimator position performs unexpectedly, Arjo 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 Arjo AB will offset losses from the drop in Arjo AB's long position.| Klimator vs. Lundin Mining | Klimator vs. Indutrade AB | Klimator vs. Havsfrun Investment AB | Klimator vs. Skandinaviska Enskilda Banken |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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