Correlation Between Powercell Sweden and Midsummer
Can any of the company-specific risk be diversified away by investing in both Powercell Sweden and Midsummer 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 Midsummer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powercell Sweden and Midsummer AB, you can compare the effects of market volatilities on Powercell Sweden and Midsummer 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 Midsummer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powercell Sweden and Midsummer.
Diversification Opportunities for Powercell Sweden and Midsummer
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Powercell and Midsummer is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Powercell Sweden and Midsummer AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midsummer AB 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 Midsummer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midsummer AB has no effect on the direction of Powercell Sweden i.e., Powercell Sweden and Midsummer go up and down completely randomly.
Pair Corralation between Powercell Sweden and Midsummer
Assuming the 90 days trading horizon Powercell Sweden is expected to generate 18.19 times less return on investment than Midsummer. But when comparing it to its historical volatility, Powercell Sweden is 1.32 times less risky than Midsummer. It trades about 0.0 of its potential returns per unit of risk. Midsummer AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Midsummer AB on September 4, 2024 and sell it today you would earn a total of 65.00 from holding Midsummer AB or generate 71.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Powercell Sweden vs. Midsummer AB
Performance |
| Timeline |
| Powercell Sweden |
| Midsummer AB |
Powercell Sweden and Midsummer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powercell Sweden and Midsummer
The main advantage of trading using opposite Powercell Sweden and Midsummer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powercell Sweden position performs unexpectedly, Midsummer 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 Midsummer will offset losses from the drop in Midsummer's long position.The idea behind Powercell Sweden and Midsummer 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.| Midsummer vs. Soder Sportfiske AB | Midsummer vs. USWE Sports AB | Midsummer vs. Lime Technologies AB | Midsummer vs. SolTech Energy Sweden |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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