Correlation Between OEM International and Fagerhult
Can any of the company-specific risk be diversified away by investing in both OEM International and Fagerhult 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 OEM International and Fagerhult into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OEM International AB and Fagerhult AB, you can compare the effects of market volatilities on OEM International and Fagerhult 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 OEM International with a short position of Fagerhult. Check out your portfolio center. Please also check ongoing floating volatility patterns of OEM International and Fagerhult.
Diversification Opportunities for OEM International and Fagerhult
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between OEM and Fagerhult is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding OEM International AB and Fagerhult AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fagerhult AB and OEM International 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 OEM International AB are associated (or correlated) with Fagerhult. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fagerhult AB has no effect on the direction of OEM International i.e., OEM International and Fagerhult go up and down completely randomly.
Pair Corralation between OEM International and Fagerhult
Assuming the 90 days trading horizon OEM International AB is expected to generate 1.05 times more return on investment than Fagerhult. However, OEM International is 1.05 times more volatile than Fagerhult AB. It trades about 0.03 of its potential returns per unit of risk. Fagerhult AB is currently generating about -0.01 per unit of risk. If you would invest 9,676 in OEM International AB on August 31, 2024 and sell it today you would earn a total of 1,944 from holding OEM International AB or generate 20.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OEM International AB vs. Fagerhult AB
Performance |
| Timeline |
| OEM International |
| Fagerhult AB |
OEM International and Fagerhult Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OEM International and Fagerhult
The main advantage of trading using opposite OEM International and Fagerhult positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OEM International position performs unexpectedly, Fagerhult 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 Fagerhult will offset losses from the drop in Fagerhult's long position.| OEM International vs. Addtech AB | OEM International vs. Indutrade AB | OEM International vs. Lifco AB | OEM International vs. NIBE Industrier AB |
| Fagerhult vs. Samhllsbyggnadsbolaget i Norden | Fagerhult vs. Sinch AB | Fagerhult vs. Embracer Group AB | Fagerhult vs. Evolution 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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