Correlation Between Nyfosa AB and Hufvudstaden
Can any of the company-specific risk be diversified away by investing in both Nyfosa AB and Hufvudstaden 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 Nyfosa AB and Hufvudstaden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nyfosa AB and Hufvudstaden AB, you can compare the effects of market volatilities on Nyfosa AB and Hufvudstaden 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 Nyfosa AB with a short position of Hufvudstaden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nyfosa AB and Hufvudstaden.
Diversification Opportunities for Nyfosa AB and Hufvudstaden
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nyfosa and Hufvudstaden is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Nyfosa AB and Hufvudstaden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hufvudstaden AB and Nyfosa AB 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 Nyfosa AB are associated (or correlated) with Hufvudstaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hufvudstaden AB has no effect on the direction of Nyfosa AB i.e., Nyfosa AB and Hufvudstaden go up and down completely randomly.
Pair Corralation between Nyfosa AB and Hufvudstaden
Assuming the 90 days trading horizon Nyfosa AB is expected to generate 1.56 times more return on investment than Hufvudstaden. However, Nyfosa AB is 1.56 times more volatile than Hufvudstaden AB. It trades about -0.03 of its potential returns per unit of risk. Hufvudstaden AB is currently generating about -0.11 per unit of risk. If you would invest 11,370 in Nyfosa AB on September 2, 2024 and sell it today you would lose (470.00) from holding Nyfosa AB or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nyfosa AB vs. Hufvudstaden AB
Performance |
| Timeline |
| Nyfosa AB |
| Hufvudstaden AB |
Nyfosa AB and Hufvudstaden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nyfosa AB and Hufvudstaden
The main advantage of trading using opposite Nyfosa AB and Hufvudstaden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nyfosa AB position performs unexpectedly, Hufvudstaden 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 Hufvudstaden will offset losses from the drop in Hufvudstaden's long position.| Nyfosa AB vs. AstraZeneca PLC | Nyfosa AB vs. Investor AB ser | Nyfosa AB vs. Investor AB ser | Nyfosa AB vs. Atlas Copco AB |
| Hufvudstaden vs. Samhaellsbyggnadsbolaget i Norden | Hufvudstaden vs. AB Sagax | Hufvudstaden vs. Atrium Ljungberg AB | Hufvudstaden vs. Nyfosa 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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