Correlation Between Lipum AB and AXichem AB
Can any of the company-specific risk be diversified away by investing in both Lipum AB and AXichem 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 AXichem 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 aXichem AB, you can compare the effects of market volatilities on Lipum AB and AXichem 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 AXichem AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipum AB and AXichem AB.
Diversification Opportunities for Lipum AB and AXichem AB
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lipum and AXichem is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and aXichem AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aXichem 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 AXichem AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of aXichem AB has no effect on the direction of Lipum AB i.e., Lipum AB and AXichem AB go up and down completely randomly.
Pair Corralation between Lipum AB and AXichem AB
Assuming the 90 days trading horizon Lipum AB is expected to generate 0.64 times more return on investment than AXichem AB. However, Lipum AB is 1.57 times less risky than AXichem AB. It trades about 0.03 of its potential returns per unit of risk. aXichem AB is currently generating about 0.0 per unit of risk. If you would invest 1,320 in Lipum AB on November 19, 2024 and sell it today you would earn a total of 210.00 from holding Lipum AB or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lipum AB vs. aXichem AB
Performance |
| Timeline |
| Lipum AB |
| aXichem AB |
Lipum AB and AXichem AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipum AB and AXichem AB
The main advantage of trading using opposite Lipum AB and AXichem AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipum AB position performs unexpectedly, AXichem 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 AXichem AB will offset losses from the drop in AXichem AB's long position.The idea behind Lipum AB and aXichem 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.| AXichem AB vs. Enzymatica publ AB | AXichem AB vs. Bactiguard Holding AB | AXichem AB vs. Cantargia AB | AXichem AB vs. BIMobject 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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