Correlation Between Peab AB and Mekonomen
Can any of the company-specific risk be diversified away by investing in both Peab AB and Mekonomen 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 Mekonomen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peab AB and Mekonomen AB, you can compare the effects of market volatilities on Peab AB and Mekonomen 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 Mekonomen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peab AB and Mekonomen.
Diversification Opportunities for Peab AB and Mekonomen
Average diversification
The 3 months correlation between Peab and Mekonomen is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Peab AB and Mekonomen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekonomen 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 Mekonomen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekonomen AB has no effect on the direction of Peab AB i.e., Peab AB and Mekonomen go up and down completely randomly.
Pair Corralation between Peab AB and Mekonomen
Assuming the 90 days trading horizon Peab AB is expected to generate 1.14 times more return on investment than Mekonomen. However, Peab AB is 1.14 times more volatile than Mekonomen AB. It trades about 0.06 of its potential returns per unit of risk. Mekonomen AB is currently generating about 0.03 per unit of risk. If you would invest 5,222 in Peab AB on September 1, 2024 and sell it today you would earn a total of 2,793 from holding Peab AB or generate 53.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Peab AB vs. Mekonomen AB
Performance |
| Timeline |
| Peab AB |
| Mekonomen AB |
Peab AB and Mekonomen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peab AB and Mekonomen
The main advantage of trading using opposite Peab AB and Mekonomen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peab AB position performs unexpectedly, Mekonomen 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 Mekonomen will offset losses from the drop in Mekonomen'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 |
| Mekonomen vs. NetJobs Group AB | Mekonomen vs. Mantex AB | Mekonomen vs. Doxa AB | Mekonomen vs. Clean Motion 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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