Correlation Between Lipum AB and AB Sagax
Can any of the company-specific risk be diversified away by investing in both Lipum AB and AB Sagax 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 AB Sagax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lipum AB and AB Sagax, you can compare the effects of market volatilities on Lipum AB and AB Sagax 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 AB Sagax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipum AB and AB Sagax.
Diversification Opportunities for Lipum AB and AB Sagax
Good diversification
The 3 months correlation between Lipum and SAGA-D is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and AB Sagax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Sagax 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 AB Sagax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Sagax has no effect on the direction of Lipum AB i.e., Lipum AB and AB Sagax go up and down completely randomly.
Pair Corralation between Lipum AB and AB Sagax
Assuming the 90 days trading horizon Lipum AB is expected to generate 5.1 times more return on investment than AB Sagax. However, Lipum AB is 5.1 times more volatile than AB Sagax. It trades about 0.01 of its potential returns per unit of risk. AB Sagax is currently generating about -0.02 per unit of risk. If you would invest 1,440 in Lipum AB on September 1, 2024 and sell it today you would lose (10.00) from holding Lipum AB or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lipum AB vs. AB Sagax
Performance |
| Timeline |
| Lipum AB |
| AB Sagax |
Lipum AB and AB Sagax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipum AB and AB Sagax
The main advantage of trading using opposite Lipum AB and AB Sagax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipum AB position performs unexpectedly, AB Sagax 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 AB Sagax will offset losses from the drop in AB Sagax'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 |
| AB Sagax vs. AB Sagax | AB Sagax vs. Samhaellsbyggnadsbolaget i Norden | AB Sagax vs. AB Sagax | AB Sagax vs. Fastighets AB Balder |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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