Correlation Between New Wave and Catella AB
Can any of the company-specific risk be diversified away by investing in both New Wave and Catella 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 New Wave and Catella AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Wave Group and Catella AB, you can compare the effects of market volatilities on New Wave and Catella 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 New Wave with a short position of Catella AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Wave and Catella AB.
Diversification Opportunities for New Wave and Catella AB
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Catella is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding New Wave Group and Catella AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catella AB and New Wave 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 New Wave Group are associated (or correlated) with Catella AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catella AB has no effect on the direction of New Wave i.e., New Wave and Catella AB go up and down completely randomly.
Pair Corralation between New Wave and Catella AB
Assuming the 90 days trading horizon New Wave Group is expected to generate 2.78 times more return on investment than Catella AB. However, New Wave is 2.78 times more volatile than Catella AB. It trades about 0.14 of its potential returns per unit of risk. Catella AB is currently generating about -0.26 per unit of risk. If you would invest 9,920 in New Wave Group on November 3, 2024 and sell it today you would earn a total of 680.00 from holding New Wave Group or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Wave Group vs. Catella AB
Performance |
| Timeline |
| New Wave Group |
| Catella AB |
New Wave and Catella AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Wave and Catella AB
The main advantage of trading using opposite New Wave and Catella AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Wave position performs unexpectedly, Catella 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 Catella AB will offset losses from the drop in Catella AB's long position.| New Wave vs. Hexatronic Group AB | New Wave vs. Inwido AB | New Wave vs. Lindab International AB | New Wave vs. Byggmax Group AB |
| Catella AB vs. Clas Ohlson AB | Catella AB vs. New Wave Group | Catella AB vs. Bilia AB | Catella AB vs. Inwido 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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