Correlation Between Aiforia Technologies and Dovre Group

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

By analyzing existing cross correlation between Aiforia Technologies Oyj and Dovre Group Plc, you can compare the effects of market volatilities on Aiforia Technologies and Dovre Group 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 Aiforia Technologies with a short position of Dovre Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aiforia Technologies and Dovre Group.

Diversification Opportunities for Aiforia Technologies and Dovre Group

-0.28

Correlation Coefficient

Aiforia Technologies  Dovre Group

Very good diversification

The 3 months correlation between Aiforia and Dovre is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Aiforia Technologies Oyj and Dovre Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dovre Group Plc and Aiforia Technologies 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 Aiforia Technologies Oyj are associated (or correlated) with Dovre Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dovre Group Plc has no effect on the direction of Aiforia Technologies i.e., Aiforia Technologies and Dovre Group go up and down completely randomly.

Pair Corralation between Aiforia Technologies and Dovre Group

Assuming the 90 days trading horizon Aiforia Technologies Oyj is expected to generate 0.46 times more return on investment than Dovre Group. However, Aiforia Technologies Oyj is 2.16 times less risky than Dovre Group. It trades about 0.09 of its potential returns per unit of risk. Dovre Group Plc is currently generating about 0.03 per unit of risk. If you would invest  357.00  in Aiforia Technologies Oyj on December 24, 2024 and sell it today you would earn a total of  42.00  from holding Aiforia Technologies Oyj or generate 11.76% return on investment over 90 days.

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

Aiforia Technologies Oyj  vs.  Dovre Group Plc

Aiforia Technologies Oyj

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aiforia Technologies Oyj are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Aiforia Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Dovre Group Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dovre Group Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Dovre Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aiforia Technologies and Dovre Group

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

The idea behind Aiforia Technologies Oyj and Dovre Group Plc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.