Correlation Between Peab AB and AVTECH Sweden
Can any of the company-specific risk be diversified away by investing in both Peab AB and AVTECH Sweden 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 Peab AB and AVTECH Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peab AB and AVTECH Sweden AB, you can compare the effects of market volatilities on Peab AB and AVTECH Sweden 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 Peab AB with a short position of AVTECH Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peab AB and AVTECH Sweden.
Diversification Opportunities for Peab AB and AVTECH Sweden
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Peab and AVTECH is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Peab AB and AVTECH Sweden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVTECH Sweden AB and Peab AB 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 Peab AB are associated (or correlated) with AVTECH Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVTECH Sweden AB has no effect on the direction of Peab AB i.e., Peab AB and AVTECH Sweden go up and down completely randomly.
Pair Corralation between Peab AB and AVTECH Sweden
Assuming the 90 days trading horizon Peab AB is expected to generate 0.37 times more return on investment than AVTECH Sweden. However, Peab AB is 2.72 times less risky than AVTECH Sweden. It trades about -0.03 of its potential returns per unit of risk. AVTECH Sweden AB is currently generating about -0.1 per unit of risk. If you would invest 8,110 in Peab AB on September 1, 2024 and sell it today you would lose (95.00) from holding Peab AB or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Peab AB vs. AVTECH Sweden AB
Performance |
| Timeline |
| Peab AB |
| AVTECH Sweden AB |
Peab AB and AVTECH Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peab AB and AVTECH Sweden
The main advantage of trading using opposite Peab AB and AVTECH Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peab AB position performs unexpectedly, AVTECH Sweden 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 AVTECH Sweden will offset losses from the drop in AVTECH Sweden's long position.| Peab AB vs. Lundin Mining | Peab AB vs. Media and Games | Peab AB vs. Lohilo Foods AB | Peab AB vs. JLT Mobile Computers |
| AVTECH Sweden vs. AroCell AB | AVTECH Sweden vs. aXichem AB | AVTECH Sweden vs. Gaming Corps AB | AVTECH Sweden vs. Alelion Energy Systems |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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