Correlation Between Investment and Ratos AB
Can any of the company-specific risk be diversified away by investing in both Investment and Ratos 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 Investment and Ratos AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment AB Latour and Ratos AB, you can compare the effects of market volatilities on Investment and Ratos 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 Investment with a short position of Ratos AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Ratos AB.
Diversification Opportunities for Investment and Ratos AB
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Investment and Ratos is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Latour and Ratos AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratos AB and Investment 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 Investment AB Latour are associated (or correlated) with Ratos AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratos AB has no effect on the direction of Investment i.e., Investment and Ratos AB go up and down completely randomly.
Pair Corralation between Investment and Ratos AB
Assuming the 90 days trading horizon Investment AB Latour is expected to generate 0.75 times more return on investment than Ratos AB. However, Investment AB Latour is 1.33 times less risky than Ratos AB. It trades about 0.04 of its potential returns per unit of risk. Ratos AB is currently generating about 0.0 per unit of risk. If you would invest 25,516 in Investment AB Latour on September 12, 2024 and sell it today you would earn a total of 3,114 from holding Investment AB Latour or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment AB Latour vs. Ratos AB
Performance |
| Timeline |
| Investment AB Latour |
| Ratos AB |
Investment and Ratos AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Ratos AB
The main advantage of trading using opposite Investment and Ratos AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, Ratos 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 Ratos AB will offset losses from the drop in Ratos AB's long position.| Investment vs. Catella AB | Investment vs. Catella AB A | Investment vs. KABE Group AB | Investment vs. IAR Systems Group |
| Ratos AB vs. Catella AB | Ratos AB vs. Catella AB A | Ratos AB vs. KABE Group AB | Ratos AB vs. IAR Systems Group |
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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