Correlation Between USWE Sports and Peab AB
Can any of the company-specific risk be diversified away by investing in both USWE Sports and Peab AB 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 USWE Sports and Peab AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE Sports AB and Peab AB, you can compare the effects of market volatilities on USWE Sports and Peab AB 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 USWE Sports with a short position of Peab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE Sports and Peab AB.
Diversification Opportunities for USWE Sports and Peab AB
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USWE and Peab is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding USWE Sports AB and Peab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peab AB and USWE Sports 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 USWE Sports AB are associated (or correlated) with Peab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peab AB has no effect on the direction of USWE Sports i.e., USWE Sports and Peab AB go up and down completely randomly.
Pair Corralation between USWE Sports and Peab AB
Assuming the 90 days trading horizon USWE Sports AB is expected to under-perform the Peab AB. In addition to that, USWE Sports is 1.93 times more volatile than Peab AB. It trades about -0.02 of its total potential returns per unit of risk. Peab AB is currently generating about 0.05 per unit of volatility. If you would invest 5,222 in Peab AB on September 12, 2024 and sell it today you would earn a total of 2,958 from holding Peab AB or generate 56.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
USWE Sports AB vs. Peab AB
Performance |
| Timeline |
| USWE Sports AB |
| Peab AB |
USWE Sports and Peab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE Sports and Peab AB
The main advantage of trading using opposite USWE Sports and Peab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE Sports position performs unexpectedly, Peab AB 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 Peab AB will offset losses from the drop in Peab AB's long position.| USWE Sports vs. Awardit AB | USWE Sports vs. RVRC Holding AB | USWE Sports vs. MIPS AB | USWE Sports vs. Smart Eye AB |
| Peab AB vs. Bravida Holding AB | Peab AB vs. Instalco Intressenter AB | Peab AB vs. NCC AB | Peab AB vs. Fasadgruppen Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |