Correlation Between Lidds AB and Dignitana
Can any of the company-specific risk be diversified away by investing in both Lidds AB and Dignitana 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 Lidds AB and Dignitana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lidds AB and Dignitana AB, you can compare the effects of market volatilities on Lidds AB and Dignitana 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 Lidds AB with a short position of Dignitana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lidds AB and Dignitana.
Diversification Opportunities for Lidds AB and Dignitana
Average diversification
The 3 months correlation between Lidds and Dignitana is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lidds AB and Dignitana AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dignitana AB and Lidds 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 Lidds AB are associated (or correlated) with Dignitana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dignitana AB has no effect on the direction of Lidds AB i.e., Lidds AB and Dignitana go up and down completely randomly.
Pair Corralation between Lidds AB and Dignitana
Assuming the 90 days trading horizon Lidds AB is expected to under-perform the Dignitana. In addition to that, Lidds AB is 1.94 times more volatile than Dignitana AB. It trades about -0.02 of its total potential returns per unit of risk. Dignitana AB is currently generating about -0.03 per unit of volatility. If you would invest 561.00 in Dignitana AB on August 26, 2024 and sell it today you would lose (442.00) from holding Dignitana AB or give up 78.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lidds AB vs. Dignitana AB
Performance |
| Timeline |
| Lidds AB |
| Dignitana AB |
Lidds AB and Dignitana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lidds AB and Dignitana
The main advantage of trading using opposite Lidds AB and Dignitana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lidds AB position performs unexpectedly, Dignitana 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 Dignitana will offset losses from the drop in Dignitana's long position.The idea behind Lidds AB and Dignitana AB 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.| Dignitana vs. C Rad AB | Dignitana vs. Paxman AB | Dignitana vs. Enzymatica publ AB | Dignitana vs. Episurf Medical 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |