Correlation Between Lipum AB and CirChem AB
Can any of the company-specific risk be diversified away by investing in both Lipum AB and CirChem 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 CirChem 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 CirChem AB, you can compare the effects of market volatilities on Lipum AB and CirChem 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 CirChem AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipum AB and CirChem AB.
Diversification Opportunities for Lipum AB and CirChem AB
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lipum and CirChem is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and CirChem AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CirChem 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 CirChem AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CirChem AB has no effect on the direction of Lipum AB i.e., Lipum AB and CirChem AB go up and down completely randomly.
Pair Corralation between Lipum AB and CirChem AB
Assuming the 90 days trading horizon Lipum AB is expected to generate 0.96 times more return on investment than CirChem AB. However, Lipum AB is 1.05 times less risky than CirChem AB. It trades about 0.02 of its potential returns per unit of risk. CirChem AB is currently generating about 0.01 per unit of risk. If you would invest 1,400 in Lipum AB on September 3, 2024 and sell it today you would earn a total of 30.00 from holding Lipum AB or generate 2.14% 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. CirChem AB
Performance |
| Timeline |
| Lipum AB |
| CirChem AB |
Lipum AB and CirChem AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipum AB and CirChem AB
The main advantage of trading using opposite Lipum AB and CirChem AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipum AB position performs unexpectedly, CirChem 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 CirChem AB will offset losses from the drop in CirChem AB's long position.| Lipum AB vs. Simris Alg AB | Lipum AB vs. Immunovia publ AB | Lipum AB vs. Sedana Medical AB | Lipum AB vs. KABE Group AB |
| CirChem AB vs. Intervacc AB | CirChem AB vs. Alzinova AB | CirChem AB vs. Clinical Laserthermia Systems | CirChem AB vs. AAC Clyde Space |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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