Correlation Between Lipum AB and RVRC Holding
Can any of the company-specific risk be diversified away by investing in both Lipum AB and RVRC Holding 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 RVRC Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lipum AB and RVRC Holding AB, you can compare the effects of market volatilities on Lipum AB and RVRC Holding 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 RVRC Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipum AB and RVRC Holding.
Diversification Opportunities for Lipum AB and RVRC Holding
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lipum and RVRC is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and RVRC Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RVRC Holding 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 RVRC Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RVRC Holding AB has no effect on the direction of Lipum AB i.e., Lipum AB and RVRC Holding go up and down completely randomly.
Pair Corralation between Lipum AB and RVRC Holding
Assuming the 90 days trading horizon Lipum AB is expected to generate 0.65 times more return on investment than RVRC Holding. However, Lipum AB is 1.55 times less risky than RVRC Holding. It trades about 0.2 of its potential returns per unit of risk. RVRC Holding AB is currently generating about -0.12 per unit of risk. If you would invest 1,450 in Lipum AB on August 31, 2024 and sell it today you would earn a total of 170.00 from holding Lipum AB or generate 11.72% 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. RVRC Holding AB
Performance |
| Timeline |
| Lipum AB |
| RVRC Holding AB |
Lipum AB and RVRC Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipum AB and RVRC Holding
The main advantage of trading using opposite Lipum AB and RVRC Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipum AB position performs unexpectedly, RVRC Holding 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 RVRC Holding will offset losses from the drop in RVRC Holding'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 |
| RVRC Holding vs. AstraZeneca PLC | RVRC Holding vs. Investor AB ser | RVRC Holding vs. Investor AB ser | RVRC Holding vs. Atlas Copco 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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