Correlation Between Softronic and Niloerngruppen
Can any of the company-specific risk be diversified away by investing in both Softronic and Niloerngruppen 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 Softronic and Niloerngruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softronic AB and Niloerngruppen AB Series, you can compare the effects of market volatilities on Softronic and Niloerngruppen 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 Softronic with a short position of Niloerngruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softronic and Niloerngruppen.
Diversification Opportunities for Softronic and Niloerngruppen
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Softronic and Niloerngruppen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and Niloerngruppen AB Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niloerngruppen AB Series and Softronic 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 Softronic AB are associated (or correlated) with Niloerngruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niloerngruppen AB Series has no effect on the direction of Softronic i.e., Softronic and Niloerngruppen go up and down completely randomly.
Pair Corralation between Softronic and Niloerngruppen
Assuming the 90 days trading horizon Softronic AB is expected to generate 1.14 times more return on investment than Niloerngruppen. However, Softronic is 1.14 times more volatile than Niloerngruppen AB Series. It trades about 0.05 of its potential returns per unit of risk. Niloerngruppen AB Series is currently generating about -0.05 per unit of risk. If you would invest 2,150 in Softronic AB on August 29, 2024 and sell it today you would earn a total of 200.00 from holding Softronic AB or generate 9.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Softronic AB vs. Niloerngruppen AB Series
Performance |
Timeline |
Softronic AB |
Niloerngruppen AB Series |
Softronic and Niloerngruppen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Softronic and Niloerngruppen
The main advantage of trading using opposite Softronic and Niloerngruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softronic position performs unexpectedly, Niloerngruppen 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 Niloerngruppen will offset losses from the drop in Niloerngruppen's long position.Softronic vs. eWork Group AB | Softronic vs. Novotek AB | Softronic vs. Prevas AB | Softronic vs. Proact IT Group |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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