Correlation Between Powercell Sweden and Malmbergs Elektriska
Can any of the company-specific risk be diversified away by investing in both Powercell Sweden and Malmbergs Elektriska 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 Powercell Sweden and Malmbergs Elektriska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powercell Sweden and Malmbergs Elektriska AB, you can compare the effects of market volatilities on Powercell Sweden and Malmbergs Elektriska 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 Powercell Sweden with a short position of Malmbergs Elektriska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powercell Sweden and Malmbergs Elektriska.
Diversification Opportunities for Powercell Sweden and Malmbergs Elektriska
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Powercell and Malmbergs is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Powercell Sweden and Malmbergs Elektriska AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malmbergs Elektriska and Powercell Sweden 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 Powercell Sweden are associated (or correlated) with Malmbergs Elektriska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malmbergs Elektriska has no effect on the direction of Powercell Sweden i.e., Powercell Sweden and Malmbergs Elektriska go up and down completely randomly.
Pair Corralation between Powercell Sweden and Malmbergs Elektriska
Assuming the 90 days trading horizon Powercell Sweden is expected to under-perform the Malmbergs Elektriska. In addition to that, Powercell Sweden is 2.3 times more volatile than Malmbergs Elektriska AB. It trades about -0.16 of its total potential returns per unit of risk. Malmbergs Elektriska AB is currently generating about -0.05 per unit of volatility. If you would invest 4,200 in Malmbergs Elektriska AB on August 24, 2024 and sell it today you would lose (100.00) from holding Malmbergs Elektriska AB or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powercell Sweden vs. Malmbergs Elektriska AB
Performance |
| Timeline |
| Powercell Sweden |
| Malmbergs Elektriska |
Powercell Sweden and Malmbergs Elektriska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powercell Sweden and Malmbergs Elektriska
The main advantage of trading using opposite Powercell Sweden and Malmbergs Elektriska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powercell Sweden position performs unexpectedly, Malmbergs Elektriska 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 Malmbergs Elektriska will offset losses from the drop in Malmbergs Elektriska's long position.The idea behind Powercell Sweden and Malmbergs Elektriska 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.| Malmbergs Elektriska vs. Novotek AB | Malmbergs Elektriska vs. Svedbergs i Dalstorp | Malmbergs Elektriska vs. KABE Group AB | Malmbergs Elektriska vs. eWork Group 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 CEOs Directory module to screen CEOs from public companies around the world.
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