Correlation Between Thule Group and Prevas AB
Can any of the company-specific risk be diversified away by investing in both Thule Group 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 Thule Group and Prevas AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thule Group AB and Prevas AB, you can compare the effects of market volatilities on Thule Group 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 Thule Group with a short position of Prevas AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thule Group and Prevas AB.
Diversification Opportunities for Thule Group and Prevas AB
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Thule and Prevas is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Thule Group AB and Prevas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prevas AB and Thule Group 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 Thule Group 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 Thule Group i.e., Thule Group and Prevas AB go up and down completely randomly.
Pair Corralation between Thule Group and Prevas AB
Assuming the 90 days trading horizon Thule Group AB is expected to generate 1.27 times more return on investment than Prevas AB. However, Thule Group is 1.27 times more volatile than Prevas AB. It trades about 0.07 of its potential returns per unit of risk. Prevas AB is currently generating about -0.43 per unit of risk. If you would invest 34,440 in Thule Group AB on November 3, 2024 and sell it today you would earn a total of 760.00 from holding Thule Group AB or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thule Group AB vs. Prevas AB
Performance |
| Timeline |
| Thule Group AB |
| Prevas AB |
Thule Group and Prevas AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thule Group and Prevas AB
The main advantage of trading using opposite Thule Group and Prevas AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thule Group 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.| Thule Group vs. MIPS AB | Thule Group vs. NIBE Industrier AB | Thule Group vs. Dometic Group AB | Thule Group vs. Husqvarna AB |
| Prevas AB vs. Softronic AB | Prevas AB vs. Novotek AB | Prevas AB vs. Svedbergs i Dalstorp | Prevas AB vs. Know IT 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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