Correlation Between Inwido AB and Centrotec

Can any of the company-specific risk be diversified away by investing in both Inwido AB and Centrotec 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 Inwido AB and Centrotec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Inwido AB and Centrotec SE, you can compare the effects of market volatilities on Inwido AB and Centrotec 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 Inwido AB with a short position of Centrotec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inwido AB and Centrotec.

Diversification Opportunities for Inwido AB and Centrotec

0.15

Correlation Coefficient

Inwido AB  Centrotec

Average diversification

The 3 months correlation between Inwido and Centrotec is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Inwido AB and Centrotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrotec SE and Inwido AB 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 Inwido AB are associated (or correlated) with Centrotec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrotec SE has no effect on the direction of Inwido AB i.e., Inwido AB and Centrotec go up and down completely randomly.

Pair Corralation between Inwido AB and Centrotec

Assuming the 90 days horizon Inwido AB is expected to generate 4.08 times more return on investment than Centrotec. However, Inwido AB is 4.08 times more volatile than Centrotec SE. It trades about 0.06 of its potential returns per unit of risk. Centrotec SE is currently generating about 0.0 per unit of risk. If you would invest  490.00  in Inwido AB on September 26, 2024 and sell it today you would earn a total of  1,081  from holding Inwido AB or generate 220.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Inwido AB  vs.  Centrotec SE

Inwido AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inwido AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Inwido AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Centrotec SE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centrotec SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Centrotec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Inwido AB and Centrotec

The main advantage of trading using opposite Inwido AB and Centrotec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inwido AB position performs unexpectedly, Centrotec 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 Centrotec will offset losses from the drop in Centrotec's long position.

The idea behind Inwido AB and Centrotec SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.