Correlation Between Modern Times and Precise Biometrics
Can any of the company-specific risk be diversified away by investing in both Modern Times and Precise Biometrics 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 Modern Times and Precise Biometrics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modern Times Group and Precise Biometrics AB, you can compare the effects of market volatilities on Modern Times and Precise Biometrics 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 Modern Times with a short position of Precise Biometrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modern Times and Precise Biometrics.
Diversification Opportunities for Modern Times and Precise Biometrics
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Modern and Precise is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Modern Times Group and Precise Biometrics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precise Biometrics and Modern Times 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 Modern Times Group are associated (or correlated) with Precise Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precise Biometrics has no effect on the direction of Modern Times i.e., Modern Times and Precise Biometrics go up and down completely randomly.
Pair Corralation between Modern Times and Precise Biometrics
Assuming the 90 days trading horizon Modern Times is expected to generate 1.62 times less return on investment than Precise Biometrics. But when comparing it to its historical volatility, Modern Times Group is 3.45 times less risky than Precise Biometrics. It trades about 0.28 of its potential returns per unit of risk. Precise Biometrics AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 360.00 in Precise Biometrics AB on August 24, 2024 and sell it today you would earn a total of 73.00 from holding Precise Biometrics AB or generate 20.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modern Times Group vs. Precise Biometrics AB
Performance |
| Timeline |
| Modern Times Group |
| Precise Biometrics |
Modern Times and Precise Biometrics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modern Times and Precise Biometrics
The main advantage of trading using opposite Modern Times and Precise Biometrics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modern Times position performs unexpectedly, Precise Biometrics 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 Precise Biometrics will offset losses from the drop in Precise Biometrics' long position.| Modern Times vs. Modern Times Group | Modern Times vs. Kinnevik Investment AB | Modern Times vs. Tele2 AB | Modern Times vs. Holmen AB |
| Precise Biometrics vs. Enea AB | Precise Biometrics vs. Novotek AB | Precise Biometrics vs. Addnode Group AB | Precise Biometrics vs. Softronic 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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