Correlation Between Lipum AB and Acast AB
Can any of the company-specific risk be diversified away by investing in both Lipum AB and Acast 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 Lipum AB and Acast AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lipum AB and Acast AB, you can compare the effects of market volatilities on Lipum AB and Acast 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 Lipum AB with a short position of Acast AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipum AB and Acast AB.
Diversification Opportunities for Lipum AB and Acast AB
Excellent diversification
The 3 months correlation between Lipum and Acast is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and Acast AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acast AB and Lipum 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 Lipum AB are associated (or correlated) with Acast AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acast AB has no effect on the direction of Lipum AB i.e., Lipum AB and Acast AB go up and down completely randomly.
Pair Corralation between Lipum AB and Acast AB
Assuming the 90 days trading horizon Lipum AB is expected to generate 1.11 times more return on investment than Acast AB. However, Lipum AB is 1.11 times more volatile than Acast AB. It trades about 0.31 of its potential returns per unit of risk. Acast AB is currently generating about -0.04 per unit of risk. If you would invest 1,410 in Lipum AB on August 28, 2024 and sell it today you would earn a total of 280.00 from holding Lipum AB or generate 19.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lipum AB vs. Acast AB
Performance |
| Timeline |
| Lipum AB |
| Acast AB |
Lipum AB and Acast AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipum AB and Acast AB
The main advantage of trading using opposite Lipum AB and Acast AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipum AB position performs unexpectedly, Acast 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 Acast AB will offset losses from the drop in Acast AB's long position.The idea behind Lipum AB and Acast 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.| Acast AB vs. Cint Group AB | Acast AB vs. Storytel AB | Acast AB vs. Stillfront Group AB | Acast AB vs. Thunderful Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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