Correlation Between Aino Health and DevPort AB

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

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

Diversification Opportunities for Aino Health and DevPort AB

-0.37

Correlation Coefficient

Aino Health  DevPort AB

Very good diversification

The 3 months correlation between Aino and DevPort is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aino Health AB and DevPort AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DevPort AB and Aino Health 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 Aino Health AB are associated (or correlated) with DevPort AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DevPort AB has no effect on the direction of Aino Health i.e., Aino Health and DevPort AB go up and down completely randomly.

Pair Corralation between Aino Health and DevPort AB

Assuming the 90 days trading horizon Aino Health AB is expected to generate 4.41 times more return on investment than DevPort AB. However, Aino Health is 4.41 times more volatile than DevPort AB. It trades about 0.05 of its potential returns per unit of risk. DevPort AB is currently generating about -0.23 per unit of risk. If you would invest  24.00  in Aino Health AB on November 29, 2024 and sell it today you would lose (1.00) from holding Aino Health AB or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Aino Health AB  vs.  DevPort AB

Aino Health AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aino Health AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aino Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

DevPort AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days DevPort AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aino Health and DevPort AB

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

The idea behind Aino Health AB and DevPort 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.