Correlation Between FLAT CAPITAL and GWILLI FOOD

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

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

Diversification Opportunities for FLAT CAPITAL and GWILLI FOOD

0.44

Correlation Coefficient

FLAT CAPITAL  GWILLI FOOD

Very weak diversification

The 3 months correlation between FLAT and GWILLI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding FLAT CAPITAL AB and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD and FLAT CAPITAL 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 FLAT CAPITAL AB are associated (or correlated) with GWILLI FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GWILLI FOOD has no effect on the direction of FLAT CAPITAL i.e., FLAT CAPITAL and GWILLI FOOD go up and down completely randomly.

Pair Corralation between FLAT CAPITAL and GWILLI FOOD

Assuming the 90 days horizon FLAT CAPITAL AB is expected to generate 7.17 times more return on investment than GWILLI FOOD. However, FLAT CAPITAL is 7.17 times more volatile than GWILLI FOOD. It trades about 0.12 of its potential returns per unit of risk. GWILLI FOOD is currently generating about -0.04 per unit of risk. If you would invest  126.00  in FLAT CAPITAL AB on December 20, 2024 and sell it today you would earn a total of  75.00  from holding FLAT CAPITAL AB or generate 59.52% return on investment over 90 days.

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

FLAT CAPITAL AB  vs.  GWILLI FOOD

FLAT CAPITAL AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FLAT CAPITAL AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FLAT CAPITAL reported solid returns over the last few months and may actually be approaching a breakup point.

GWILLI FOOD

Risk-Adjusted Performance

Very Weak

Over the last 90 days GWILLI FOOD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, GWILLI FOOD is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FLAT CAPITAL and GWILLI FOOD

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

The idea behind FLAT CAPITAL AB and GWILLI FOOD 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.