Correlation Between Laureate Education and Powercell Sweden

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Can any of the company-specific risk be diversified away by investing in both Laureate Education and Powercell Sweden 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 Laureate Education and Powercell Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and Powercell Sweden, you can compare the effects of market volatilities on Laureate Education and Powercell Sweden 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 Laureate Education with a short position of Powercell Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and Powercell Sweden.

Diversification Opportunities for Laureate Education and Powercell Sweden

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Laureate and Powercell is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and Powercell Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powercell Sweden and Laureate Education 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 Laureate Education are associated (or correlated) with Powercell Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powercell Sweden has no effect on the direction of Laureate Education i.e., Laureate Education and Powercell Sweden go up and down completely randomly.

Pair Corralation between Laureate Education and Powercell Sweden

Assuming the 90 days trading horizon Laureate Education is expected to generate 44.86 times less return on investment than Powercell Sweden. But when comparing it to its historical volatility, Laureate Education is 2.88 times less risky than Powercell Sweden. It trades about 0.01 of its potential returns per unit of risk. Powercell Sweden is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  310.00  in Powercell Sweden on October 11, 2024 and sell it today you would earn a total of  18.00  from holding Powercell Sweden or generate 5.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Laureate Education  vs.  Powercell Sweden

 Performance 
       Timeline  
Laureate Education 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Laureate Education are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Laureate Education reported solid returns over the last few months and may actually be approaching a breakup point.
Powercell Sweden 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Powercell Sweden are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Powercell Sweden may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Laureate Education and Powercell Sweden Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Laureate Education and Powercell Sweden

The main advantage of trading using opposite Laureate Education and Powercell Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education position performs unexpectedly, Powercell Sweden 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 Powercell Sweden will offset losses from the drop in Powercell Sweden's long position.
The idea behind Laureate Education and Powercell Sweden 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.
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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