Correlation Between Malmbergs Elektriska and Powercell Sweden
Can any of the company-specific risk be diversified away by investing in both Malmbergs Elektriska and Powercell Sweden 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 Powercell Sweden 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 Powercell Sweden, you can compare the effects of market volatilities on Malmbergs Elektriska and Powercell Sweden 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 Powercell Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malmbergs Elektriska and Powercell Sweden.
Diversification Opportunities for Malmbergs Elektriska and Powercell Sweden
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Malmbergs and Powercell is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Malmbergs Elektriska AB and Powercell Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powercell Sweden 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 Powercell Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powercell Sweden has no effect on the direction of Malmbergs Elektriska i.e., Malmbergs Elektriska and Powercell Sweden go up and down completely randomly.
Pair Corralation between Malmbergs Elektriska and Powercell Sweden
Assuming the 90 days trading horizon Malmbergs Elektriska AB is expected to generate 0.45 times more return on investment than Powercell Sweden. However, Malmbergs Elektriska AB is 2.22 times less risky than Powercell Sweden. It trades about -0.11 of its potential returns per unit of risk. Powercell Sweden is currently generating about -0.21 per unit of risk. If you would invest 4,210 in Malmbergs Elektriska AB on August 27, 2024 and sell it today you would lose (180.00) from holding Malmbergs Elektriska AB or give up 4.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malmbergs Elektriska AB vs. Powercell Sweden
Performance |
| Timeline |
| Malmbergs Elektriska |
| Powercell Sweden |
Malmbergs Elektriska and Powercell Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malmbergs Elektriska and Powercell Sweden
The main advantage of trading using opposite Malmbergs Elektriska and Powercell Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malmbergs Elektriska position performs unexpectedly, Powercell Sweden 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 Powercell Sweden will offset losses from the drop in Powercell Sweden's long position.| Malmbergs Elektriska vs. Divio Technologies AB | Malmbergs Elektriska vs. XMReality AB | Malmbergs Elektriska vs. KABE Group AB | Malmbergs Elektriska vs. IAR Systems Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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