Correlation Between Mekonomen and Lipum AB
Can any of the company-specific risk be diversified away by investing in both Mekonomen and Lipum 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 Lipum 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 Lipum AB, you can compare the effects of market volatilities on Mekonomen and Lipum 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 Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekonomen and Lipum AB.
Diversification Opportunities for Mekonomen and Lipum AB
Good diversification
The 3 months correlation between Mekonomen and Lipum is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum 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 Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Mekonomen i.e., Mekonomen and Lipum AB go up and down completely randomly.
Pair Corralation between Mekonomen and Lipum AB
Assuming the 90 days trading horizon Mekonomen is expected to generate 12.33 times less return on investment than Lipum AB. But when comparing it to its historical volatility, Mekonomen AB is 1.93 times less risky than Lipum AB. It trades about 0.02 of its potential returns per unit of risk. Lipum AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,360 in Lipum AB on November 7, 2024 and sell it today you would earn a total of 70.00 from holding Lipum AB or generate 5.15% 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. Lipum AB
Performance |
| Timeline |
| Mekonomen AB |
| Lipum AB |
Mekonomen and Lipum AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mekonomen and Lipum AB
The main advantage of trading using opposite Mekonomen and Lipum AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mekonomen position performs unexpectedly, Lipum 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 Lipum AB will offset losses from the drop in Lipum AB's long position.| Mekonomen vs. Clas Ohlson AB | Mekonomen vs. Bilia AB | Mekonomen vs. Byggmax Group AB | Mekonomen vs. Peab AB |
| Lipum AB vs. Ascelia Pharma AB | Lipum AB vs. NextCell Pharma AB | Lipum AB vs. Annexin Pharmaceuticals AB | Lipum AB vs. AlzeCure Pharma |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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