Correlation Between AB Volvo and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both AB Volvo and Nexam Chemical 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 Nexam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and Nexam Chemical Holding, you can compare the effects of market volatilities on AB Volvo and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and Nexam Chemical.
Diversification Opportunities for AB Volvo and Nexam Chemical
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VOLV-A and Nexam is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of AB Volvo i.e., AB Volvo and Nexam Chemical go up and down completely randomly.
Pair Corralation between AB Volvo and Nexam Chemical
Assuming the 90 days trading horizon AB Volvo is expected to generate 2.13 times less return on investment than Nexam Chemical. But when comparing it to its historical volatility, AB Volvo is 2.8 times less risky than Nexam Chemical. It trades about 0.05 of its potential returns per unit of risk. Nexam Chemical Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 337.00 in Nexam Chemical Holding on August 26, 2024 and sell it today you would earn a total of 82.00 from holding Nexam Chemical Holding or generate 24.33% 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. Nexam Chemical Holding
Performance |
| Timeline |
| AB Volvo |
| Nexam Chemical Holding |
AB Volvo and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and Nexam Chemical
The main advantage of trading using opposite AB Volvo and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical'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 |
| Nexam Chemical vs. Svenska Aerogel Holding | Nexam Chemical vs. Kancera AB | Nexam Chemical vs. BIMobject AB | Nexam Chemical vs. KABE 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 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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