Correlation Between Matas AS and Alm Brand
Can any of the company-specific risk be diversified away by investing in both Matas AS and Alm Brand 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 Matas AS and Alm Brand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matas AS and Alm Brand, you can compare the effects of market volatilities on Matas AS and Alm Brand 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 Matas AS with a short position of Alm Brand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matas AS and Alm Brand.
Diversification Opportunities for Matas AS and Alm Brand
Weak diversification
The 3 months correlation between Matas and Alm is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Matas AS and Alm Brand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alm Brand and Matas AS 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 Matas AS are associated (or correlated) with Alm Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alm Brand has no effect on the direction of Matas AS i.e., Matas AS and Alm Brand go up and down completely randomly.
Pair Corralation between Matas AS and Alm Brand
Assuming the 90 days trading horizon Matas AS is expected to generate 1.7 times more return on investment than Alm Brand. However, Matas AS is 1.7 times more volatile than Alm Brand. It trades about 0.01 of its potential returns per unit of risk. Alm Brand is currently generating about -0.03 per unit of risk. If you would invest 12,520 in Matas AS on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Matas AS or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matas AS vs. Alm Brand
Performance |
| Timeline |
| Matas AS |
| Alm Brand |
Matas AS and Alm Brand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matas AS and Alm Brand
The main advantage of trading using opposite Matas AS and Alm Brand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matas AS position performs unexpectedly, Alm Brand 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 Alm Brand will offset losses from the drop in Alm Brand's long position.The idea behind Matas AS and Alm Brand 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.| Alm Brand vs. Dataproces Group AS | Alm Brand vs. cBrain AS | Alm Brand vs. ALK Abell AS | Alm Brand vs. ChemoMetec AS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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