Correlation Between ROCKWOOL International and ALK Abell
Can any of the company-specific risk be diversified away by investing in both ROCKWOOL International 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 ROCKWOOL International and ALK Abell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ROCKWOOL International AS and ALK Abell AS, you can compare the effects of market volatilities on ROCKWOOL International 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 ROCKWOOL International with a short position of ALK Abell. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROCKWOOL International and ALK Abell.
Diversification Opportunities for ROCKWOOL International and ALK Abell
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ROCKWOOL and ALK is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ROCKWOOL International 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 ROCKWOOL International 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 ROCKWOOL International 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 ROCKWOOL International i.e., ROCKWOOL International and ALK Abell go up and down completely randomly.
Pair Corralation between ROCKWOOL International and ALK Abell
Assuming the 90 days trading horizon ROCKWOOL International AS is expected to under-perform the ALK Abell. But the stock apears to be less risky and, when comparing its historical volatility, ROCKWOOL International AS is 1.21 times less risky than ALK Abell. The stock trades about -0.12 of its potential returns per unit of risk. The ALK Abell AS is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 16,550 in ALK Abell AS on October 26, 2024 and sell it today you would lose (1,010) from holding ALK Abell AS or give up 6.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ROCKWOOL International AS vs. ALK Abell AS
Performance |
| Timeline |
| ROCKWOOL International |
| ALK Abell AS |
ROCKWOOL International and ALK Abell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ROCKWOOL International and ALK Abell
The main advantage of trading using opposite ROCKWOOL International and ALK Abell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROCKWOOL International 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.| ROCKWOOL International vs. FLSmidth Co | ROCKWOOL International vs. GN Store Nord | ROCKWOOL International vs. Ambu AS | ROCKWOOL International vs. DSV Panalpina AS |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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