Correlation Between AB Volvo and Xbrane Biopharma
Can any of the company-specific risk be diversified away by investing in both AB Volvo and Xbrane Biopharma 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 Xbrane Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and Xbrane Biopharma AB, you can compare the effects of market volatilities on AB Volvo and Xbrane Biopharma 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 Xbrane Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and Xbrane Biopharma.
Diversification Opportunities for AB Volvo and Xbrane Biopharma
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VOLV-B and Xbrane is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Xbrane Biopharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xbrane Biopharma 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 Xbrane Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xbrane Biopharma has no effect on the direction of AB Volvo i.e., AB Volvo and Xbrane Biopharma go up and down completely randomly.
Pair Corralation between AB Volvo and Xbrane Biopharma
Assuming the 90 days trading horizon AB Volvo is expected to generate 0.08 times more return on investment than Xbrane Biopharma. However, AB Volvo is 12.61 times less risky than Xbrane Biopharma. It trades about 0.07 of its potential returns per unit of risk. Xbrane Biopharma AB is currently generating about -0.01 per unit of risk. If you would invest 21,774 in AB Volvo on September 1, 2024 and sell it today you would earn a total of 5,386 from holding AB Volvo or generate 24.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
AB Volvo vs. Xbrane Biopharma AB
Performance |
| Timeline |
| AB Volvo |
| Xbrane Biopharma |
AB Volvo and Xbrane Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and Xbrane Biopharma
The main advantage of trading using opposite AB Volvo and Xbrane Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo position performs unexpectedly, Xbrane Biopharma 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 Xbrane Biopharma will offset losses from the drop in Xbrane Biopharma's long position.| AB Volvo vs. AstraZeneca PLC | AB Volvo vs. H M Hennes | AB Volvo vs. Telefonaktiebolaget LM Ericsson | AB Volvo vs. Investor AB ser |
| Xbrane Biopharma vs. Kancera AB | Xbrane Biopharma vs. Cyxone AB | Xbrane Biopharma vs. Lidds AB | Xbrane Biopharma vs. Cantargia 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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