Correlation Between Living Cell and ALK-Abelló A/S
Can any of the company-specific risk be diversified away by investing in both Living Cell and ALK-Abelló A/S 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 Living Cell and ALK-Abelló A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Living Cell Technologies and ALK Abell AS, you can compare the effects of market volatilities on Living Cell and ALK-Abelló A/S 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 Living Cell with a short position of ALK-Abelló A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Living Cell and ALK-Abelló A/S.
Diversification Opportunities for Living Cell and ALK-Abelló A/S
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Living and ALK-Abelló is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Living Cell Technologies and ALK Abell AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALK-Abelló A/S and Living Cell 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 Living Cell Technologies are associated (or correlated) with ALK-Abelló A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALK-Abelló A/S has no effect on the direction of Living Cell i.e., Living Cell and ALK-Abelló A/S go up and down completely randomly.
Pair Corralation between Living Cell and ALK-Abelló A/S
Assuming the 90 days horizon Living Cell Technologies is expected to generate 12.43 times more return on investment than ALK-Abelló A/S. However, Living Cell is 12.43 times more volatile than ALK Abell AS. It trades about 0.16 of its potential returns per unit of risk. ALK Abell AS is currently generating about -0.22 per unit of risk. If you would invest 0.16 in Living Cell Technologies on November 6, 2024 and sell it today you would earn a total of 0.09 from holding Living Cell Technologies or generate 56.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Living Cell Technologies vs. ALK Abell AS
Performance |
| Timeline |
| Living Cell Technologies |
| ALK-Abelló A/S |
Living Cell and ALK-Abelló A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Living Cell and ALK-Abelló A/S
The main advantage of trading using opposite Living Cell and ALK-Abelló A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Living Cell position performs unexpectedly, ALK-Abelló A/S 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 ALK-Abelló A/S will offset losses from the drop in ALK-Abelló A/S's long position.| Living Cell vs. Insteel Industries | Living Cell vs. Aperture Health | Living Cell vs. Genfit | Living Cell vs. Summit Therapeutics PLC |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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