Correlation Between Mekonomen and Betsson AB
Can any of the company-specific risk be diversified away by investing in both Mekonomen and Betsson AB 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 Mekonomen and Betsson AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mekonomen AB and Betsson AB, you can compare the effects of market volatilities on Mekonomen and Betsson AB 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 Mekonomen with a short position of Betsson AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekonomen and Betsson AB.
Diversification Opportunities for Mekonomen and Betsson AB
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mekonomen and Betsson is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Betsson AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betsson AB and Mekonomen 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 Mekonomen AB are associated (or correlated) with Betsson AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betsson AB has no effect on the direction of Mekonomen i.e., Mekonomen and Betsson AB go up and down completely randomly.
Pair Corralation between Mekonomen and Betsson AB
Assuming the 90 days trading horizon Mekonomen AB is expected to generate 1.05 times more return on investment than Betsson AB. However, Mekonomen is 1.05 times more volatile than Betsson AB. It trades about 0.09 of its potential returns per unit of risk. Betsson AB is currently generating about 0.06 per unit of risk. If you would invest 8,472 in Mekonomen AB on September 24, 2024 and sell it today you would earn a total of 4,668 from holding Mekonomen AB or generate 55.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mekonomen AB vs. Betsson AB
Performance |
| Timeline |
| Mekonomen AB |
| Betsson AB |
Mekonomen and Betsson AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mekonomen and Betsson AB
The main advantage of trading using opposite Mekonomen and Betsson AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mekonomen position performs unexpectedly, Betsson AB 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 Betsson AB will offset losses from the drop in Betsson AB's long position.The idea behind Mekonomen AB and Betsson 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.| Betsson AB vs. XMReality AB | Betsson AB vs. Mavshack publ AB | Betsson AB vs. Serstech AB | Betsson AB vs. Mekonomen AB |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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