Correlation Between Lipum AB and EEducation Albert
Can any of the company-specific risk be diversified away by investing in both Lipum AB and EEducation Albert 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 EEducation Albert into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lipum AB and eEducation Albert AB, you can compare the effects of market volatilities on Lipum AB and EEducation Albert 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 EEducation Albert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipum AB and EEducation Albert.
Diversification Opportunities for Lipum AB and EEducation Albert
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lipum and EEducation is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and eEducation Albert AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eEducation Albert 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 EEducation Albert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eEducation Albert has no effect on the direction of Lipum AB i.e., Lipum AB and EEducation Albert go up and down completely randomly.
Pair Corralation between Lipum AB and EEducation Albert
Assuming the 90 days trading horizon Lipum AB is expected to generate 0.92 times more return on investment than EEducation Albert. However, Lipum AB is 1.09 times less risky than EEducation Albert. It trades about 0.34 of its potential returns per unit of risk. eEducation Albert AB is currently generating about 0.15 per unit of risk. If you would invest 1,200 in Lipum AB on October 30, 2024 and sell it today you would earn a total of 240.00 from holding Lipum AB or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lipum AB vs. eEducation Albert AB
Performance |
| Timeline |
| Lipum AB |
| eEducation Albert |
Lipum AB and EEducation Albert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipum AB and EEducation Albert
The main advantage of trading using opposite Lipum AB and EEducation Albert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipum AB position performs unexpectedly, EEducation Albert 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 EEducation Albert will offset losses from the drop in EEducation Albert's long position.The idea behind Lipum AB and eEducation Albert 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.| EEducation Albert vs. Greater Than AB | EEducation Albert vs. Cint Group AB | EEducation Albert vs. Acconeer AB | EEducation Albert 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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