Correlation Between AB Volvo and Ferronordic
Can any of the company-specific risk be diversified away by investing in both AB Volvo and Ferronordic 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 Ferronordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and Ferronordic AB, you can compare the effects of market volatilities on AB Volvo and Ferronordic 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 Ferronordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and Ferronordic.
Diversification Opportunities for AB Volvo and Ferronordic
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VOLV-A and Ferronordic is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Ferronordic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferronordic 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 Ferronordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferronordic AB has no effect on the direction of AB Volvo i.e., AB Volvo and Ferronordic go up and down completely randomly.
Pair Corralation between AB Volvo and Ferronordic
Assuming the 90 days trading horizon AB Volvo is expected to generate 0.76 times more return on investment than Ferronordic. However, AB Volvo is 1.31 times less risky than Ferronordic. It trades about 0.14 of its potential returns per unit of risk. Ferronordic AB is currently generating about -0.03 per unit of risk. If you would invest 25,520 in AB Volvo on September 12, 2024 and sell it today you would earn a total of 3,100 from holding AB Volvo or generate 12.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Volvo vs. Ferronordic AB
Performance |
| Timeline |
| AB Volvo |
| Ferronordic AB |
AB Volvo and Ferronordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and Ferronordic
The main advantage of trading using opposite AB Volvo and Ferronordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo position performs unexpectedly, Ferronordic 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 Ferronordic will offset losses from the drop in Ferronordic'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 |
| Ferronordic vs. 24SevenOffice Scandinavia AB | Ferronordic vs. High Coast Distillery | Ferronordic vs. Nexam Chemical Holding | Ferronordic vs. Nitro Games Oyj |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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