Correlation Between Ratos AB and Holmen AB
Can any of the company-specific risk be diversified away by investing in both Ratos AB 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 Ratos AB and Holmen AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ratos AB and Holmen AB, you can compare the effects of market volatilities on Ratos AB 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 Ratos AB with a short position of Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ratos AB and Holmen AB.
Diversification Opportunities for Ratos AB and Holmen AB
Very poor diversification
The 3 months correlation between Ratos and Holmen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ratos AB and Holmen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB and Ratos 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 Ratos AB 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 Ratos AB i.e., Ratos AB and Holmen AB go up and down completely randomly.
Pair Corralation between Ratos AB and Holmen AB
Assuming the 90 days trading horizon Ratos AB is expected to under-perform the Holmen AB. In addition to that, Ratos AB is 1.54 times more volatile than Holmen AB. It trades about -0.04 of its total potential returns per unit of risk. Holmen AB is currently generating about 0.11 per unit of volatility. If you would invest 40,800 in Holmen AB on September 14, 2024 and sell it today you would earn a total of 800.00 from holding Holmen AB or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ratos AB vs. Holmen AB
Performance |
| Timeline |
| Ratos AB |
| Holmen AB |
Ratos AB and Holmen AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ratos AB and Holmen AB
The main advantage of trading using opposite Ratos AB and Holmen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ratos AB 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.| Ratos AB vs. Kinnevik Investment AB | Ratos AB vs. L E Lundbergfretagen | Ratos AB vs. Investment AB Latour | Ratos AB vs. Industrivarden AB ser |
| Holmen AB vs. Svenska Cellulosa Aktiebolaget | Holmen AB vs. Boliden AB | Holmen AB vs. Husqvarna AB | Holmen AB vs. Trelleborg 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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