Correlation Between Pandora AS and ALK Abell
Can any of the company-specific risk be diversified away by investing in both Pandora AS and ALK Abell 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 Pandora AS and ALK Abell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pandora AS and ALK Abell AS, you can compare the effects of market volatilities on Pandora AS and ALK Abell 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 Pandora AS with a short position of ALK Abell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pandora AS and ALK Abell.
Diversification Opportunities for Pandora AS and ALK Abell
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pandora and ALK is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pandora AS and ALK Abell AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALK Abell AS and Pandora AS 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 Pandora AS are associated (or correlated) with ALK Abell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALK Abell AS has no effect on the direction of Pandora AS i.e., Pandora AS and ALK Abell go up and down completely randomly.
Pair Corralation between Pandora AS and ALK Abell
Assuming the 90 days trading horizon Pandora AS is expected to generate 0.72 times more return on investment than ALK Abell. However, Pandora AS is 1.4 times less risky than ALK Abell. It trades about 0.12 of its potential returns per unit of risk. ALK Abell AS is currently generating about 0.08 per unit of risk. If you would invest 55,200 in Pandora AS on September 1, 2024 and sell it today you would earn a total of 58,450 from holding Pandora AS or generate 105.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pandora AS vs. ALK Abell AS
Performance |
| Timeline |
| Pandora AS |
| ALK Abell AS |
Pandora AS and ALK Abell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pandora AS and ALK Abell
The main advantage of trading using opposite Pandora AS and ALK Abell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pandora AS position performs unexpectedly, ALK Abell 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 ALK Abell will offset losses from the drop in ALK Abell's long position.| Pandora AS vs. Ralph Lauren Corp | Pandora AS vs. Tapestry | Pandora AS vs. PVH Corp | Pandora AS vs. Levi Strauss Co |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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