Correlation Between Skanska AB and AQ Group
Can any of the company-specific risk be diversified away by investing in both Skanska AB and AQ Group 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 Skanska AB and AQ Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skanska AB and AQ Group AB, you can compare the effects of market volatilities on Skanska AB and AQ Group 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 Skanska AB with a short position of AQ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skanska AB and AQ Group.
Diversification Opportunities for Skanska AB and AQ Group
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skanska and AQ Group is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Skanska AB and AQ Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AQ Group AB and Skanska 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 Skanska AB are associated (or correlated) with AQ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AQ Group AB has no effect on the direction of Skanska AB i.e., Skanska AB and AQ Group go up and down completely randomly.
Pair Corralation between Skanska AB and AQ Group
Assuming the 90 days trading horizon Skanska AB is expected to generate 1.72 times less return on investment than AQ Group. But when comparing it to its historical volatility, Skanska AB is 1.98 times less risky than AQ Group. It trades about 0.17 of its potential returns per unit of risk. AQ Group AB is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 13,608 in AQ Group AB on October 25, 2024 and sell it today you would earn a total of 2,926 from holding AQ Group AB or generate 21.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.31% |
| Values | Daily Returns |
Skanska AB vs. AQ Group AB
Performance |
| Timeline |
| Skanska AB |
| AQ Group AB |
Skanska AB and AQ Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skanska AB and AQ Group
The main advantage of trading using opposite Skanska AB and AQ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skanska AB position performs unexpectedly, AQ Group 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 AQ Group will offset losses from the drop in AQ Group's long position.The idea behind Skanska AB and AQ Group AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AQ Group vs. Inwido AB | AQ Group vs. Bufab Holding AB | AQ Group vs. Beijer Alma AB | AQ Group vs. Addtech 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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