Correlation Between Quebecor and Holmen AB
Can any of the company-specific risk be diversified away by investing in both Quebecor and Holmen AB 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 Quebecor and Holmen AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quebecor and Holmen AB, you can compare the effects of market volatilities on Quebecor and Holmen AB 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 Quebecor with a short position of Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quebecor and Holmen AB.
Diversification Opportunities for Quebecor and Holmen AB
Poor diversification
The 3 months correlation between Quebecor and Holmen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Quebecor and Holmen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB and Quebecor 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 Quebecor are associated (or correlated) with Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB has no effect on the direction of Quebecor i.e., Quebecor and Holmen AB go up and down completely randomly.
Pair Corralation between Quebecor and Holmen AB
Assuming the 90 days horizon Quebecor is expected to generate 1.36 times more return on investment than Holmen AB. However, Quebecor is 1.36 times more volatile than Holmen AB. It trades about -0.23 of its potential returns per unit of risk. Holmen AB is currently generating about -0.37 per unit of risk. If you would invest 2,324 in Quebecor on August 27, 2024 and sell it today you would lose (164.00) from holding Quebecor or give up 7.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quebecor vs. Holmen AB
Performance |
| Timeline |
| Quebecor |
| Holmen AB |
Quebecor and Holmen AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quebecor and Holmen AB
The main advantage of trading using opposite Quebecor and Holmen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quebecor position performs unexpectedly, Holmen AB 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 Holmen AB will offset losses from the drop in Holmen AB's long position.| Quebecor vs. REGAL ASIAN INVESTMENTS | Quebecor vs. QURATE RETAIL INC | Quebecor vs. New Residential Investment | Quebecor vs. HK Electric Investments |
| Holmen AB vs. Sumitomo Rubber Industries | Holmen AB vs. APPLIED MATERIALS | Holmen AB vs. Citic Telecom International | Holmen AB vs. Chunghwa Telecom 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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