Correlation Between Troax Group and Invisio Communications
Can any of the company-specific risk be diversified away by investing in both Troax Group and Invisio Communications 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 Troax Group and Invisio Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Troax Group AB and Invisio Communications AB, you can compare the effects of market volatilities on Troax Group and Invisio Communications 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 Troax Group with a short position of Invisio Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Troax Group and Invisio Communications.
Diversification Opportunities for Troax Group and Invisio Communications
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Troax and Invisio is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Troax Group AB and Invisio Communications AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invisio Communications and Troax 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 Troax Group AB are associated (or correlated) with Invisio Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invisio Communications has no effect on the direction of Troax Group i.e., Troax Group and Invisio Communications go up and down completely randomly.
Pair Corralation between Troax Group and Invisio Communications
Assuming the 90 days trading horizon Troax Group is expected to generate 2.9 times less return on investment than Invisio Communications. But when comparing it to its historical volatility, Troax Group AB is 1.09 times less risky than Invisio Communications. It trades about 0.03 of its potential returns per unit of risk. Invisio Communications AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 17,740 in Invisio Communications AB on September 1, 2024 and sell it today you would earn a total of 10,460 from holding Invisio Communications AB or generate 58.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Troax Group AB vs. Invisio Communications AB
Performance |
| Timeline |
| Troax Group AB |
| Invisio Communications |
Troax Group and Invisio Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Troax Group and Invisio Communications
The main advantage of trading using opposite Troax Group and Invisio Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Troax Group position performs unexpectedly, Invisio Communications 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 Invisio Communications will offset losses from the drop in Invisio Communications' long position.| Troax Group vs. Bufab Holding AB | Troax Group vs. Thule Group AB | Troax Group vs. Beijer Ref AB | Troax Group vs. Lifco AB |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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