Correlation Between Online Brands and FormPipe Software
Can any of the company-specific risk be diversified away by investing in both Online Brands and FormPipe Software 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 Online Brands and FormPipe Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Online Brands Nordic and FormPipe Software AB, you can compare the effects of market volatilities on Online Brands and FormPipe Software 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 Online Brands with a short position of FormPipe Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Online Brands and FormPipe Software.
Diversification Opportunities for Online Brands and FormPipe Software
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Online and FormPipe is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Online Brands Nordic and FormPipe Software AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormPipe Software and Online Brands 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 Online Brands Nordic are associated (or correlated) with FormPipe Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormPipe Software has no effect on the direction of Online Brands i.e., Online Brands and FormPipe Software go up and down completely randomly.
Pair Corralation between Online Brands and FormPipe Software
Assuming the 90 days trading horizon Online Brands Nordic is expected to generate 1.8 times more return on investment than FormPipe Software. However, Online Brands is 1.8 times more volatile than FormPipe Software AB. It trades about 0.03 of its potential returns per unit of risk. FormPipe Software AB is currently generating about 0.01 per unit of risk. If you would invest 1,275 in Online Brands Nordic on October 24, 2024 and sell it today you would earn a total of 155.00 from holding Online Brands Nordic or generate 12.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Online Brands Nordic vs. FormPipe Software AB
Performance |
| Timeline |
| Online Brands Nordic |
| FormPipe Software |
Online Brands and FormPipe Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Online Brands and FormPipe Software
The main advantage of trading using opposite Online Brands and FormPipe Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Online Brands position performs unexpectedly, FormPipe Software 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 FormPipe Software will offset losses from the drop in FormPipe Software's long position.| Online Brands vs. Cloetta AB | Online Brands vs. Inwido AB | Online Brands vs. Fagerhult AB | Online Brands vs. Beijer Alma AB |
| FormPipe Software vs. Enea AB | FormPipe Software vs. Novotek AB | FormPipe Software vs. Addnode Group AB | FormPipe Software 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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