Correlation Between Rottneros and Dedicare
Can any of the company-specific risk be diversified away by investing in both Rottneros and Dedicare 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 Rottneros and Dedicare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rottneros AB and Dedicare AB, you can compare the effects of market volatilities on Rottneros and Dedicare 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 Rottneros with a short position of Dedicare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rottneros and Dedicare.
Diversification Opportunities for Rottneros and Dedicare
Very poor diversification
The 3 months correlation between Rottneros and Dedicare is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Rottneros AB and Dedicare AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dedicare AB and Rottneros 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 Rottneros AB are associated (or correlated) with Dedicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dedicare AB has no effect on the direction of Rottneros i.e., Rottneros and Dedicare go up and down completely randomly.
Pair Corralation between Rottneros and Dedicare
Assuming the 90 days trading horizon Rottneros AB is expected to generate 0.93 times more return on investment than Dedicare. However, Rottneros AB is 1.07 times less risky than Dedicare. It trades about -0.08 of its potential returns per unit of risk. Dedicare AB is currently generating about -0.08 per unit of risk. If you would invest 976.00 in Rottneros AB on September 1, 2024 and sell it today you would lose (41.00) from holding Rottneros AB or give up 4.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Rottneros AB vs. Dedicare AB
Performance |
| Timeline |
| Rottneros AB |
| Dedicare AB |
Rottneros and Dedicare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rottneros and Dedicare
The main advantage of trading using opposite Rottneros and Dedicare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rottneros position performs unexpectedly, Dedicare 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 Dedicare will offset losses from the drop in Dedicare's long position.| Rottneros vs. Holmen AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Husqvarna AB | Rottneros vs. Alfa Laval 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| CEOs Directory Screen CEOs from public companies around the world |