Correlation Between Acarix AS and Prevas AB

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

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

Diversification Opportunities for Acarix AS and Prevas AB

0.22

Correlation Coefficient

Acarix AS  Prevas AB

Modest diversification

The 3 months correlation between Acarix and Prevas is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Acarix AS and Prevas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prevas AB and Acarix AS 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 Acarix AS are associated (or correlated) with Prevas AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prevas AB has no effect on the direction of Acarix AS i.e., Acarix AS and Prevas AB go up and down completely randomly.

Pair Corralation between Acarix AS and Prevas AB

Assuming the 90 days trading horizon Acarix AS is expected to under-perform the Prevas AB. In addition to that, Acarix AS is 2.64 times more volatile than Prevas AB. It trades about -0.09 of its total potential returns per unit of risk. Prevas AB is currently generating about 0.0 per unit of volatility. If you would invest  11,040  in Prevas AB on December 2, 2024 and sell it today you would lose (100.00) from holding Prevas AB or give up 0.91% of portfolio value over 90 days.

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

Acarix AS  vs.  Prevas AB

Acarix AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acarix AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Prevas AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prevas AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Prevas AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Acarix AS and Prevas AB

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

The idea behind Acarix AS and Prevas AB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.