Correlation Between Lipum AB and Arjo AB
Can any of the company-specific risk be diversified away by investing in both Lipum AB and Arjo 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 Arjo 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 Arjo AB, you can compare the effects of market volatilities on Lipum AB and Arjo 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 Arjo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipum AB and Arjo AB.
Diversification Opportunities for Lipum AB and Arjo AB
Very good diversification
The 3 months correlation between Lipum and Arjo is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and Arjo AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arjo 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 Arjo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arjo AB has no effect on the direction of Lipum AB i.e., Lipum AB and Arjo AB go up and down completely randomly.
Pair Corralation between Lipum AB and Arjo AB
Assuming the 90 days trading horizon Lipum AB is expected to generate 2.3 times more return on investment than Arjo AB. However, Lipum AB is 2.3 times more volatile than Arjo AB. It trades about 0.02 of its potential returns per unit of risk. Arjo AB is currently generating about 0.01 per unit of risk. If you would invest 1,375 in Lipum AB on November 2, 2024 and sell it today you would earn a total of 15.00 from holding Lipum AB or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lipum AB vs. Arjo AB
Performance |
| Timeline |
| Lipum AB |
| Arjo AB |
Lipum AB and Arjo AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipum AB and Arjo AB
The main advantage of trading using opposite Lipum AB and Arjo AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipum AB position performs unexpectedly, Arjo 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 Arjo AB will offset losses from the drop in Arjo AB's long position.| Lipum AB vs. Ascelia Pharma AB | Lipum AB vs. NextCell Pharma AB | Lipum AB vs. Annexin Pharmaceuticals AB | Lipum AB vs. AlzeCure Pharma |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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