Correlation Between Tryg AS and ISS AS
Can any of the company-specific risk be diversified away by investing in both Tryg AS and ISS AS 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 ISS AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tryg AS and ISS AS, you can compare the effects of market volatilities on Tryg AS and ISS AS 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 ISS AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tryg AS and ISS AS.
Diversification Opportunities for Tryg AS and ISS AS
Very good diversification
The 3 months correlation between Tryg and ISS is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tryg AS and ISS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISS AS 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 ISS AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISS AS has no effect on the direction of Tryg AS i.e., Tryg AS and ISS AS go up and down completely randomly.
Pair Corralation between Tryg AS and ISS AS
Assuming the 90 days trading horizon Tryg AS is expected to under-perform the ISS AS. But the stock apears to be less risky and, when comparing its historical volatility, Tryg AS is 1.06 times less risky than ISS AS. The stock trades about -0.12 of its potential returns per unit of risk. The ISS AS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13,340 in ISS AS on November 1, 2024 and sell it today you would earn a total of 190.00 from holding ISS AS or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tryg AS vs. ISS AS
Performance |
| Timeline |
| Tryg AS |
| ISS AS |
Tryg AS and ISS AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tryg AS and ISS AS
The main advantage of trading using opposite Tryg AS and ISS AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tryg AS position performs unexpectedly, ISS AS 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 ISS AS will offset losses from the drop in ISS AS's long position.The idea behind Tryg AS and ISS AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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