Correlation Between Investment and Sileon AB
Can any of the company-specific risk be diversified away by investing in both Investment and Sileon AB 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 Investment and Sileon AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment AB Oresund and Sileon AB, you can compare the effects of market volatilities on Investment and Sileon AB 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 Investment with a short position of Sileon AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Sileon AB.
Diversification Opportunities for Investment and Sileon AB
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investment and Sileon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Oresund and Sileon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sileon AB and Investment 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 Investment AB Oresund are associated (or correlated) with Sileon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sileon AB has no effect on the direction of Investment i.e., Investment and Sileon AB go up and down completely randomly.
Pair Corralation between Investment and Sileon AB
Assuming the 90 days trading horizon Investment AB Oresund is expected to generate 0.23 times more return on investment than Sileon AB. However, Investment AB Oresund is 4.41 times less risky than Sileon AB. It trades about 0.02 of its potential returns per unit of risk. Sileon AB is currently generating about -0.07 per unit of risk. If you would invest 9,650 in Investment AB Oresund on September 26, 2024 and sell it today you would earn a total of 1,070 from holding Investment AB Oresund or generate 11.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment AB Oresund vs. Sileon AB
Performance |
| Timeline |
| Investment AB Oresund |
| Sileon AB |
Investment and Sileon AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Sileon AB
The main advantage of trading using opposite Investment and Sileon AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, Sileon AB 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 Sileon AB will offset losses from the drop in Sileon AB's long position.The idea behind Investment AB Oresund and Sileon AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sileon AB vs. Scandic Hotels Group | Sileon AB vs. Lime Technologies AB | Sileon AB vs. USWE Sports AB | Sileon AB vs. Sdiptech 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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