Correlation Between Tryg AS and Alm Brand
Can any of the company-specific risk be diversified away by investing in both Tryg AS and Alm Brand 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 Tryg AS and Alm Brand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tryg AS and Alm Brand, you can compare the effects of market volatilities on Tryg AS and Alm Brand 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 Tryg AS with a short position of Alm Brand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tryg AS and Alm Brand.
Diversification Opportunities for Tryg AS and Alm Brand
Very poor diversification
The 3 months correlation between Tryg and Alm is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Tryg AS and Alm Brand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alm Brand and Tryg AS 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 Tryg AS are associated (or correlated) with Alm Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alm Brand has no effect on the direction of Tryg AS i.e., Tryg AS and Alm Brand go up and down completely randomly.
Pair Corralation between Tryg AS and Alm Brand
Assuming the 90 days trading horizon Tryg AS is expected to generate 1.39 times less return on investment than Alm Brand. But when comparing it to its historical volatility, Tryg AS is 1.5 times less risky than Alm Brand. It trades about 0.09 of its potential returns per unit of risk. Alm Brand is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,015 in Alm Brand on August 25, 2024 and sell it today you would earn a total of 339.00 from holding Alm Brand or generate 33.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tryg AS vs. Alm Brand
Performance |
| Timeline |
| Tryg AS |
| Alm Brand |
Tryg AS and Alm Brand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tryg AS and Alm Brand
The main advantage of trading using opposite Tryg AS and Alm Brand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tryg AS position performs unexpectedly, Alm Brand 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 Alm Brand will offset losses from the drop in Alm Brand's long position.| Tryg AS vs. Dataproces Group AS | Tryg AS vs. cBrain AS | Tryg AS vs. ALK Abell AS | Tryg AS vs. ChemoMetec AS |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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