Correlation Between AB Volvo and Guideline Geo
Can any of the company-specific risk be diversified away by investing in both AB Volvo and Guideline Geo 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 Guideline Geo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and Guideline Geo AB, you can compare the effects of market volatilities on AB Volvo and Guideline Geo 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 Guideline Geo. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and Guideline Geo.
Diversification Opportunities for AB Volvo and Guideline Geo
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VOLV-A and Guideline is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Guideline Geo AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guideline Geo 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 Guideline Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guideline Geo AB has no effect on the direction of AB Volvo i.e., AB Volvo and Guideline Geo go up and down completely randomly.
Pair Corralation between AB Volvo and Guideline Geo
Assuming the 90 days trading horizon AB Volvo is expected to generate 1.12 times less return on investment than Guideline Geo. But when comparing it to its historical volatility, AB Volvo is 2.95 times less risky than Guideline Geo. It trades about 0.06 of its potential returns per unit of risk. Guideline Geo AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 770.00 in Guideline Geo AB on September 2, 2024 and sell it today you would earn a total of 18.00 from holding Guideline Geo AB or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Volvo vs. Guideline Geo AB
Performance |
| Timeline |
| AB Volvo |
| Guideline Geo AB |
AB Volvo and Guideline Geo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and Guideline Geo
The main advantage of trading using opposite AB Volvo and Guideline Geo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo position performs unexpectedly, Guideline Geo 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 Guideline Geo will offset losses from the drop in Guideline Geo'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 |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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