Correlation Between Malmbergs Elektriska and Divio Technologies

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Malmbergs Elektriska and Divio Technologies 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 Malmbergs Elektriska and Divio Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malmbergs Elektriska AB and Divio Technologies AB, you can compare the effects of market volatilities on Malmbergs Elektriska and Divio Technologies 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 Malmbergs Elektriska with a short position of Divio Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malmbergs Elektriska and Divio Technologies.

Diversification Opportunities for Malmbergs Elektriska and Divio Technologies

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Malmbergs and Divio is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Malmbergs Elektriska AB and Divio Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Divio Technologies and Malmbergs Elektriska 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 Malmbergs Elektriska AB are associated (or correlated) with Divio Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Divio Technologies has no effect on the direction of Malmbergs Elektriska i.e., Malmbergs Elektriska and Divio Technologies go up and down completely randomly.

Pair Corralation between Malmbergs Elektriska and Divio Technologies

Assuming the 90 days trading horizon Malmbergs Elektriska AB is expected to under-perform the Divio Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Malmbergs Elektriska AB is 5.31 times less risky than Divio Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The Divio Technologies AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Divio Technologies AB on August 28, 2024 and sell it today you would lose (1.00) from holding Divio Technologies AB or give up 6.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Malmbergs Elektriska AB  vs.  Divio Technologies AB

 Performance 
       Timeline  
Malmbergs Elektriska 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Malmbergs Elektriska AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Malmbergs Elektriska is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Divio Technologies 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Divio Technologies AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Divio Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Malmbergs Elektriska and Divio Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Malmbergs Elektriska and Divio Technologies

The main advantage of trading using opposite Malmbergs Elektriska and Divio Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malmbergs Elektriska position performs unexpectedly, Divio Technologies 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 Divio Technologies will offset losses from the drop in Divio Technologies' long position.
The idea behind Malmbergs Elektriska AB and Divio Technologies AB 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.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges