Correlation Between Mekonomen and Probi AB
Can any of the company-specific risk be diversified away by investing in both Mekonomen and Probi 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 Probi 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 Probi AB, you can compare the effects of market volatilities on Mekonomen and Probi 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 Probi AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekonomen and Probi AB.
Diversification Opportunities for Mekonomen and Probi AB
Good diversification
The 3 months correlation between Mekonomen and Probi is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Probi AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Probi 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 Probi AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Probi AB has no effect on the direction of Mekonomen i.e., Mekonomen and Probi AB go up and down completely randomly.
Pair Corralation between Mekonomen and Probi AB
Assuming the 90 days trading horizon Mekonomen AB is expected to under-perform the Probi AB. In addition to that, Mekonomen is 2.67 times more volatile than Probi AB. It trades about -0.07 of its total potential returns per unit of risk. Probi AB is currently generating about -0.11 per unit of volatility. If you would invest 34,900 in Probi AB on November 3, 2024 and sell it today you would lose (400.00) from holding Probi AB or give up 1.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mekonomen AB vs. Probi AB
Performance |
| Timeline |
| Mekonomen AB |
| Probi AB |
Mekonomen and Probi AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mekonomen and Probi AB
The main advantage of trading using opposite Mekonomen and Probi AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mekonomen position performs unexpectedly, Probi 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 Probi AB will offset losses from the drop in Probi AB's long position.| Mekonomen vs. Clas Ohlson AB | Mekonomen vs. Bilia AB | Mekonomen vs. Byggmax Group AB | Mekonomen vs. Peab 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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