Correlation Between AB Traction and Dedicare
Can any of the company-specific risk be diversified away by investing in both AB Traction and Dedicare 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 AB Traction and Dedicare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Traction and Dedicare AB, you can compare the effects of market volatilities on AB Traction and Dedicare 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 AB Traction with a short position of Dedicare. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Traction and Dedicare.
Diversification Opportunities for AB Traction and Dedicare
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRAC-B and Dedicare is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding AB Traction and Dedicare AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dedicare AB and AB Traction 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 AB Traction are associated (or correlated) with Dedicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dedicare AB has no effect on the direction of AB Traction i.e., AB Traction and Dedicare go up and down completely randomly.
Pair Corralation between AB Traction and Dedicare
Assuming the 90 days trading horizon AB Traction is expected to generate 0.78 times more return on investment than Dedicare. However, AB Traction is 1.28 times less risky than Dedicare. It trades about -0.04 of its potential returns per unit of risk. Dedicare AB is currently generating about -0.08 per unit of risk. If you would invest 28,100 in AB Traction on September 1, 2024 and sell it today you would lose (500.00) from holding AB Traction or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AB Traction vs. Dedicare AB
Performance |
| Timeline |
| AB Traction |
| Dedicare AB |
AB Traction and Dedicare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Traction and Dedicare
The main advantage of trading using opposite AB Traction and Dedicare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Traction position performs unexpectedly, Dedicare 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 Dedicare will offset losses from the drop in Dedicare's long position.| AB Traction vs. Investor AB ser | AB Traction vs. Industrivarden AB ser | AB Traction vs. Tele2 AB | AB Traction vs. Boliden 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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