Correlation Between Momentum Group and Cell Impact
Can any of the company-specific risk be diversified away by investing in both Momentum Group and Cell Impact 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 Momentum Group and Cell Impact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Momentum Group AB and Cell Impact AB, you can compare the effects of market volatilities on Momentum Group and Cell Impact 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 Momentum Group with a short position of Cell Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Momentum Group and Cell Impact.
Diversification Opportunities for Momentum Group and Cell Impact
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Momentum and Cell is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Momentum Group AB and Cell Impact AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cell Impact AB and Momentum Group 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 Momentum Group AB are associated (or correlated) with Cell Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cell Impact AB has no effect on the direction of Momentum Group i.e., Momentum Group and Cell Impact go up and down completely randomly.
Pair Corralation between Momentum Group and Cell Impact
Assuming the 90 days trading horizon Momentum Group AB is expected to generate 0.27 times more return on investment than Cell Impact. However, Momentum Group AB is 3.7 times less risky than Cell Impact. It trades about 0.09 of its potential returns per unit of risk. Cell Impact AB is currently generating about -0.03 per unit of risk. If you would invest 5,768 in Momentum Group AB on September 24, 2024 and sell it today you would earn a total of 11,332 from holding Momentum Group AB or generate 196.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Momentum Group AB vs. Cell Impact AB
Performance |
| Timeline |
| Momentum Group AB |
| Cell Impact AB |
Momentum Group and Cell Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Momentum Group and Cell Impact
The main advantage of trading using opposite Momentum Group and Cell Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentum Group position performs unexpectedly, Cell Impact 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 Cell Impact will offset losses from the drop in Cell Impact's long position.| Momentum Group vs. Indutrade AB | Momentum Group vs. Bufab Holding AB | Momentum Group vs. Alligo AB Series | Momentum Group vs. Teqnion AB |
| Cell Impact vs. Humble Group AB | Cell Impact vs. Enad Global 7 | Cell Impact vs. Goodbye Kansas Group | Cell Impact 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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