Correlation Between AB Volvo and CellaVision
Can any of the company-specific risk be diversified away by investing in both AB Volvo and CellaVision 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 AB Volvo and CellaVision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and CellaVision AB, you can compare the effects of market volatilities on AB Volvo and CellaVision 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 AB Volvo with a short position of CellaVision. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and CellaVision.
Diversification Opportunities for AB Volvo and CellaVision
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VOLV-A and CellaVision is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and CellaVision AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CellaVision AB and AB Volvo 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 AB Volvo are associated (or correlated) with CellaVision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CellaVision AB has no effect on the direction of AB Volvo i.e., AB Volvo and CellaVision go up and down completely randomly.
Pair Corralation between AB Volvo and CellaVision
Assuming the 90 days trading horizon AB Volvo is expected to generate 0.71 times more return on investment than CellaVision. However, AB Volvo is 1.4 times less risky than CellaVision. It trades about -0.01 of its potential returns per unit of risk. CellaVision AB is currently generating about -0.45 per unit of risk. If you would invest 27,280 in AB Volvo on August 24, 2024 and sell it today you would lose (200.00) from holding AB Volvo or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Volvo vs. CellaVision AB
Performance |
| Timeline |
| AB Volvo |
| CellaVision AB |
AB Volvo and CellaVision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and CellaVision
The main advantage of trading using opposite AB Volvo and CellaVision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo position performs unexpectedly, CellaVision 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 CellaVision will offset losses from the drop in CellaVision's long position.| AB Volvo vs. Investor AB ser | AB Volvo vs. Sandvik AB | AB Volvo vs. Svenska Handelsbanken AB | AB Volvo vs. Atlas Copco AB |
| CellaVision vs. Vitrolife AB | CellaVision vs. Biotage AB | CellaVision vs. Sectra AB | CellaVision vs. BioGaia 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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