Correlation Between MIPS AB and New Wave
Can any of the company-specific risk be diversified away by investing in both MIPS AB and New Wave 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 MIPS AB and New Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MIPS AB and New Wave Group, you can compare the effects of market volatilities on MIPS AB and New Wave 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 MIPS AB with a short position of New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of MIPS AB and New Wave.
Diversification Opportunities for MIPS AB and New Wave
Poor diversification
The 3 months correlation between MIPS and New is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding MIPS AB and New Wave Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Group and MIPS AB 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 MIPS AB are associated (or correlated) with New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Group has no effect on the direction of MIPS AB i.e., MIPS AB and New Wave go up and down completely randomly.
Pair Corralation between MIPS AB and New Wave
Assuming the 90 days trading horizon MIPS AB is expected to generate 1.43 times more return on investment than New Wave. However, MIPS AB is 1.43 times more volatile than New Wave Group. It trades about 0.02 of its potential returns per unit of risk. New Wave Group is currently generating about 0.01 per unit of risk. If you would invest 41,034 in MIPS AB on August 24, 2024 and sell it today you would earn a total of 4,126 from holding MIPS AB or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MIPS AB vs. New Wave Group
Performance |
| Timeline |
| MIPS AB |
| New Wave Group |
MIPS AB and New Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MIPS AB and New Wave
The main advantage of trading using opposite MIPS AB and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MIPS AB position performs unexpectedly, New Wave 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 New Wave will offset losses from the drop in New Wave's long position.The idea behind MIPS AB and New Wave Group 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.| New Wave vs. Hexatronic Group AB | New Wave vs. Inwido AB | New Wave vs. Lindab International AB | New Wave vs. Byggmax Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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