Correlation Between Sonova Holding and Alfa Laval
Can any of the company-specific risk be diversified away by investing in both Sonova Holding and Alfa Laval 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 Sonova Holding and Alfa Laval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonova Holding AG and Alfa Laval AB, you can compare the effects of market volatilities on Sonova Holding and Alfa Laval 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 Sonova Holding with a short position of Alfa Laval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonova Holding and Alfa Laval.
Diversification Opportunities for Sonova Holding and Alfa Laval
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sonova and Alfa is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sonova Holding AG and Alfa Laval AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Laval AB and Sonova Holding 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 Sonova Holding AG are associated (or correlated) with Alfa Laval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Laval AB has no effect on the direction of Sonova Holding i.e., Sonova Holding and Alfa Laval go up and down completely randomly.
Pair Corralation between Sonova Holding and Alfa Laval
Assuming the 90 days horizon Sonova Holding AG is expected to under-perform the Alfa Laval. In addition to that, Sonova Holding is 1.34 times more volatile than Alfa Laval AB. It trades about -0.1 of its total potential returns per unit of risk. Alfa Laval AB is currently generating about -0.09 per unit of volatility. If you would invest 4,465 in Alfa Laval AB on August 24, 2024 and sell it today you would lose (157.00) from holding Alfa Laval AB or give up 3.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonova Holding AG vs. Alfa Laval AB
Performance |
| Timeline |
| Sonova Holding AG |
| Alfa Laval AB |
Sonova Holding and Alfa Laval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonova Holding and Alfa Laval
The main advantage of trading using opposite Sonova Holding and Alfa Laval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonova Holding position performs unexpectedly, Alfa Laval 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 Alfa Laval will offset losses from the drop in Alfa Laval's long position.| Sonova Holding vs. Armm Inc | Sonova Holding vs. Cellink AB | Sonova Holding vs. Bone Biologics Corp | Sonova Holding vs. BICO Group AB |
| Alfa Laval vs. Aumann AG | Alfa Laval vs. Arista Power | Alfa Laval vs. Atlas Copco AB | Alfa Laval vs. American Commerce Solutions |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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