Correlation Between Trifork Holding and ALK Abell
Can any of the company-specific risk be diversified away by investing in both Trifork Holding and ALK Abell 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 Trifork Holding and ALK Abell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trifork Holding AG and ALK Abell AS, you can compare the effects of market volatilities on Trifork Holding and ALK Abell 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 Trifork Holding with a short position of ALK Abell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trifork Holding and ALK Abell.
Diversification Opportunities for Trifork Holding and ALK Abell
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trifork and ALK is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Trifork Holding AG and ALK Abell AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALK Abell AS and Trifork 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 Trifork Holding AG are associated (or correlated) with ALK Abell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALK Abell AS has no effect on the direction of Trifork Holding i.e., Trifork Holding and ALK Abell go up and down completely randomly.
Pair Corralation between Trifork Holding and ALK Abell
Assuming the 90 days trading horizon Trifork Holding AG is expected to under-perform the ALK Abell. In addition to that, Trifork Holding is 1.0 times more volatile than ALK Abell AS. It trades about -0.15 of its total potential returns per unit of risk. ALK Abell AS is currently generating about -0.07 per unit of volatility. If you would invest 17,800 in ALK Abell AS on August 29, 2024 and sell it today you would lose (1,950) from holding ALK Abell AS or give up 10.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trifork Holding AG vs. ALK Abell AS
Performance |
| Timeline |
| Trifork Holding AG |
| ALK Abell AS |
Trifork Holding and ALK Abell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trifork Holding and ALK Abell
The main advantage of trading using opposite Trifork Holding and ALK Abell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trifork Holding position performs unexpectedly, ALK Abell 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 ALK Abell will offset losses from the drop in ALK Abell's long position.| Trifork Holding vs. Netcompany Group AS | Trifork Holding vs. cBrain AS | Trifork Holding vs. ALK Abell AS | Trifork Holding vs. Green Hydrogen Systems |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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