Correlation Between Prevas AB and Generic Sweden
Can any of the company-specific risk be diversified away by investing in both Prevas AB and Generic 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 Prevas AB and Generic Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prevas AB and Generic Sweden publ, you can compare the effects of market volatilities on Prevas AB and Generic 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 Prevas AB with a short position of Generic Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prevas AB and Generic Sweden.
Diversification Opportunities for Prevas AB and Generic Sweden
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prevas and Generic is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Prevas AB and Generic Sweden publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Sweden publ and Prevas 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 Prevas AB are associated (or correlated) with Generic Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Sweden publ has no effect on the direction of Prevas AB i.e., Prevas AB and Generic Sweden go up and down completely randomly.
Pair Corralation between Prevas AB and Generic Sweden
Assuming the 90 days trading horizon Prevas AB is expected to under-perform the Generic Sweden. But the stock apears to be less risky and, when comparing its historical volatility, Prevas AB is 2.03 times less risky than Generic Sweden. The stock trades about -0.07 of its potential returns per unit of risk. The Generic Sweden publ is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 5,720 in Generic Sweden publ on December 11, 2024 and sell it today you would lose (160.00) from holding Generic Sweden publ or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prevas AB vs. Generic Sweden publ
Performance |
| Timeline |
| Prevas AB |
| Generic Sweden publ |
Prevas AB and Generic Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prevas AB and Generic Sweden
The main advantage of trading using opposite Prevas AB and Generic Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prevas AB position performs unexpectedly, Generic 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 Generic Sweden will offset losses from the drop in Generic Sweden's long position.| Prevas AB vs. Softronic AB | Prevas AB vs. Novotek AB | Prevas AB vs. Svedbergs i Dalstorp | Prevas AB vs. Know IT AB |
| Generic Sweden vs. FormPipe Software AB | Generic Sweden vs. Novotek AB | Generic Sweden vs. Hanza AB | Generic Sweden vs. Genovis 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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