Correlation Between AB Volvo and Checkin Group
Can any of the company-specific risk be diversified away by investing in both AB Volvo and Checkin Group 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 Checkin Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and Checkin Group AB, you can compare the effects of market volatilities on AB Volvo and Checkin Group 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 Checkin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and Checkin Group.
Diversification Opportunities for AB Volvo and Checkin Group
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VOLV-B and Checkin is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Checkin Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Checkin Group 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 Checkin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Checkin Group AB has no effect on the direction of AB Volvo i.e., AB Volvo and Checkin Group go up and down completely randomly.
Pair Corralation between AB Volvo and Checkin Group
Assuming the 90 days trading horizon AB Volvo is expected to generate 22.56 times less return on investment than Checkin Group. But when comparing it to its historical volatility, AB Volvo is 2.46 times less risky than Checkin Group. It trades about 0.03 of its potential returns per unit of risk. Checkin Group AB is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,450 in Checkin Group AB on August 25, 2024 and sell it today you would earn a total of 395.00 from holding Checkin Group AB or generate 27.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
AB Volvo vs. Checkin Group AB
Performance |
| Timeline |
| AB Volvo |
| Checkin Group AB |
AB Volvo and Checkin Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and Checkin Group
The main advantage of trading using opposite AB Volvo and Checkin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo position performs unexpectedly, Checkin Group 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 Checkin Group will offset losses from the drop in Checkin Group's long position.| AB Volvo vs. AstraZeneca PLC | AB Volvo vs. H M Hennes | AB Volvo vs. Investor AB ser | AB Volvo vs. Swedbank 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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