Correlation Between Softronic and Prevas AB
Can any of the company-specific risk be diversified away by investing in both Softronic and Prevas AB 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 Prevas AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softronic AB and Prevas AB, you can compare the effects of market volatilities on Softronic and Prevas AB 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 Prevas AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softronic and Prevas AB.
Diversification Opportunities for Softronic and Prevas AB
Pay attention - limited upside
The 3 months correlation between Softronic and Prevas is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and Prevas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prevas AB 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 Prevas AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prevas AB has no effect on the direction of Softronic i.e., Softronic and Prevas AB go up and down completely randomly.
Pair Corralation between Softronic and Prevas AB
Assuming the 90 days trading horizon Softronic AB is expected to generate 0.47 times more return on investment than Prevas AB. However, Softronic AB is 2.13 times less risky than Prevas AB. It trades about 0.0 of its potential returns per unit of risk. Prevas AB is currently generating about -0.1 per unit of risk. If you would invest 2,390 in Softronic AB on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Softronic AB or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Softronic AB vs. Prevas AB
Performance |
| Timeline |
| Softronic AB |
| Prevas AB |
Softronic and Prevas AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softronic and Prevas AB
The main advantage of trading using opposite Softronic and Prevas AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softronic position performs unexpectedly, Prevas AB 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 Prevas AB will offset losses from the drop in Prevas AB's long position.| Softronic vs. eWork Group AB | Softronic vs. Novotek AB | Softronic vs. Prevas AB | Softronic vs. Proact IT Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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