Correlation Between Wallenstam and Hufvudstaden
Can any of the company-specific risk be diversified away by investing in both Wallenstam and Hufvudstaden 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 Wallenstam and Hufvudstaden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wallenstam AB and Hufvudstaden AB, you can compare the effects of market volatilities on Wallenstam and Hufvudstaden 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 Wallenstam with a short position of Hufvudstaden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wallenstam and Hufvudstaden.
Diversification Opportunities for Wallenstam and Hufvudstaden
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wallenstam and Hufvudstaden is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Wallenstam AB and Hufvudstaden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hufvudstaden AB and Wallenstam 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 Wallenstam AB are associated (or correlated) with Hufvudstaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hufvudstaden AB has no effect on the direction of Wallenstam i.e., Wallenstam and Hufvudstaden go up and down completely randomly.
Pair Corralation between Wallenstam and Hufvudstaden
Assuming the 90 days trading horizon Wallenstam AB is expected to generate 1.42 times more return on investment than Hufvudstaden. However, Wallenstam is 1.42 times more volatile than Hufvudstaden AB. It trades about 0.05 of its potential returns per unit of risk. Hufvudstaden AB is currently generating about 0.0 per unit of risk. If you would invest 3,844 in Wallenstam AB on August 31, 2024 and sell it today you would earn a total of 1,296 from holding Wallenstam AB or generate 33.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wallenstam AB vs. Hufvudstaden AB
Performance |
| Timeline |
| Wallenstam AB |
| Hufvudstaden AB |
Wallenstam and Hufvudstaden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wallenstam and Hufvudstaden
The main advantage of trading using opposite Wallenstam and Hufvudstaden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wallenstam position performs unexpectedly, Hufvudstaden 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 Hufvudstaden will offset losses from the drop in Hufvudstaden's long position.| Wallenstam vs. FastPartner AB | Wallenstam vs. Svolder AB | Wallenstam vs. Fastighets AB Balder | Wallenstam vs. Cibus Nordic Real |
| Hufvudstaden vs. Fabege AB | Hufvudstaden vs. Castellum AB | Hufvudstaden vs. Wallenstam AB | Hufvudstaden vs. Fastighets AB Balder |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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