Correlation Between Momentum Group and Humble Group
Can any of the company-specific risk be diversified away by investing in both Momentum Group and Humble Group 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 Humble Group 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 Humble Group AB, you can compare the effects of market volatilities on Momentum Group and Humble Group 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 Humble Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Momentum Group and Humble Group.
Diversification Opportunities for Momentum Group and Humble Group
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Momentum and Humble is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Momentum Group AB and Humble Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humble Group 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 Humble Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humble Group AB has no effect on the direction of Momentum Group i.e., Momentum Group and Humble Group go up and down completely randomly.
Pair Corralation between Momentum Group and Humble Group
Assuming the 90 days trading horizon Momentum Group is expected to generate 4.94 times less return on investment than Humble Group. But when comparing it to its historical volatility, Momentum Group AB is 1.12 times less risky than Humble Group. It trades about 0.06 of its potential returns per unit of risk. Humble Group AB is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,038 in Humble Group AB on September 24, 2024 and sell it today you would earn a total of 179.00 from holding Humble Group AB or generate 17.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Momentum Group AB vs. Humble Group AB
Performance |
| Timeline |
| Momentum Group AB |
| Humble Group AB |
Momentum Group and Humble Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Momentum Group and Humble Group
The main advantage of trading using opposite Momentum Group and Humble Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentum Group position performs unexpectedly, Humble Group 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 Humble Group will offset losses from the drop in Humble Group'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 |
| Humble Group vs. Samhllsbyggnadsbolaget i Norden | Humble Group vs. Media and Games | Humble Group vs. Hexatronic Group AB | Humble Group vs. Sinch 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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