Correlation Between Rottneros and G5 Entertainment
Can any of the company-specific risk be diversified away by investing in both Rottneros and G5 Entertainment 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 G5 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rottneros AB and G5 Entertainment publ, you can compare the effects of market volatilities on Rottneros and G5 Entertainment 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 G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rottneros and G5 Entertainment.
Diversification Opportunities for Rottneros and G5 Entertainment
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rottneros and G5EN is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Rottneros AB and G5 Entertainment publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment publ 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 G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment publ has no effect on the direction of Rottneros i.e., Rottneros and G5 Entertainment go up and down completely randomly.
Pair Corralation between Rottneros and G5 Entertainment
Assuming the 90 days trading horizon Rottneros AB is expected to under-perform the G5 Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Rottneros AB is 1.26 times less risky than G5 Entertainment. The stock trades about -0.03 of its potential returns per unit of risk. The G5 Entertainment publ is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 9,420 in G5 Entertainment publ on September 4, 2024 and sell it today you would earn a total of 680.00 from holding G5 Entertainment publ or generate 7.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rottneros AB vs. G5 Entertainment publ
Performance |
| Timeline |
| Rottneros AB |
| G5 Entertainment publ |
Rottneros and G5 Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rottneros and G5 Entertainment
The main advantage of trading using opposite Rottneros and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rottneros position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.| Rottneros vs. BillerudKorsnas AB | Rottneros vs. SSAB AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Axfood AB |
| G5 Entertainment vs. Tele2 AB | G5 Entertainment vs. Swedbank AB | G5 Entertainment vs. Svenska Handelsbanken AB | G5 Entertainment vs. Nordea Bank Abp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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