Correlation Between New Wave and Logistea A
Can any of the company-specific risk be diversified away by investing in both New Wave and Logistea A 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 Logistea A 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 Logistea A, you can compare the effects of market volatilities on New Wave and Logistea A 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 Logistea A. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Wave and Logistea A.
Diversification Opportunities for New Wave and Logistea A
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Logistea is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding New Wave Group and Logistea A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logistea A 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 Logistea A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logistea A has no effect on the direction of New Wave i.e., New Wave and Logistea A go up and down completely randomly.
Pair Corralation between New Wave and Logistea A
Assuming the 90 days trading horizon New Wave Group is expected to under-perform the Logistea A. In addition to that, New Wave is 1.56 times more volatile than Logistea A. It trades about -0.21 of its total potential returns per unit of risk. Logistea A is currently generating about -0.01 per unit of volatility. If you would invest 1,545 in Logistea A on September 4, 2024 and sell it today you would lose (10.00) from holding Logistea A or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Wave Group vs. Logistea A
Performance |
| Timeline |
| New Wave Group |
| Logistea A |
New Wave and Logistea A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Wave and Logistea A
The main advantage of trading using opposite New Wave and Logistea A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Wave position performs unexpectedly, Logistea A 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 Logistea A will offset losses from the drop in Logistea A'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 |
| Logistea A vs. Logistea AB Series | Logistea A vs. Corem Property Group | Logistea A vs. NP3 Fastigheter AB | Logistea A vs. NCAB Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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