Correlation Between New Wave and Dustin Group
Can any of the company-specific risk be diversified away by investing in both New Wave and Dustin 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 New Wave and Dustin Group 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 Dustin Group AB, you can compare the effects of market volatilities on New Wave and Dustin 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 New Wave with a short position of Dustin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Wave and Dustin Group.
Diversification Opportunities for New Wave and Dustin Group
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Dustin is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding New Wave Group and Dustin Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dustin Group 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 Dustin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dustin Group AB has no effect on the direction of New Wave i.e., New Wave and Dustin Group go up and down completely randomly.
Pair Corralation between New Wave and Dustin Group
Assuming the 90 days trading horizon New Wave Group is expected to generate 0.85 times more return on investment than Dustin Group. However, New Wave Group is 1.18 times less risky than Dustin Group. It trades about -0.06 of its potential returns per unit of risk. Dustin Group AB is currently generating about -0.23 per unit of risk. If you would invest 11,580 in New Wave Group on August 25, 2024 and sell it today you would lose (1,920) from holding New Wave Group or give up 16.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Wave Group vs. Dustin Group AB
Performance |
| Timeline |
| New Wave Group |
| Dustin Group AB |
New Wave and Dustin Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Wave and Dustin Group
The main advantage of trading using opposite New Wave and Dustin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Wave position performs unexpectedly, Dustin 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 Dustin Group will offset losses from the drop in Dustin Group'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 |
| Dustin Group vs. New Wave Group | Dustin Group vs. Clas Ohlson AB | Dustin Group vs. BE Group AB | Dustin Group vs. Betsson 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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