Correlation Between AB Volvo and Rottneros
Can any of the company-specific risk be diversified away by investing in both AB Volvo and Rottneros 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 Rottneros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and Rottneros AB, you can compare the effects of market volatilities on AB Volvo and Rottneros 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 Rottneros. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and Rottneros.
Diversification Opportunities for AB Volvo and Rottneros
Very good diversification
The 3 months correlation between VOLV-A and Rottneros is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Rottneros AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rottneros 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 Rottneros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rottneros AB has no effect on the direction of AB Volvo i.e., AB Volvo and Rottneros go up and down completely randomly.
Pair Corralation between AB Volvo and Rottneros
Assuming the 90 days trading horizon AB Volvo is expected to generate 0.77 times more return on investment than Rottneros. However, AB Volvo is 1.3 times less risky than Rottneros. It trades about -0.05 of its potential returns per unit of risk. Rottneros AB is currently generating about -0.08 per unit of risk. If you would invest 27,900 in AB Volvo on September 1, 2024 and sell it today you would lose (600.00) from holding AB Volvo or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AB Volvo vs. Rottneros AB
Performance |
| Timeline |
| AB Volvo |
| Rottneros AB |
AB Volvo and Rottneros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and Rottneros
The main advantage of trading using opposite AB Volvo and Rottneros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo position performs unexpectedly, Rottneros 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 Rottneros will offset losses from the drop in Rottneros' 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 |
| Rottneros vs. Holmen AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Husqvarna AB | Rottneros vs. Alfa Laval 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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