Correlation Between Alandsbanken Abp and Admicom Oyj

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

By analyzing existing cross correlation between Alandsbanken Abp A and Admicom Oyj, you can compare the effects of market volatilities on Alandsbanken Abp and Admicom Oyj 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 Alandsbanken Abp with a short position of Admicom Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alandsbanken Abp and Admicom Oyj.

Diversification Opportunities for Alandsbanken Abp and Admicom Oyj

0.38

Correlation Coefficient

Alandsbanken Abp  Admicom Oyj

Weak diversification

The 3 months correlation between Alandsbanken and Admicom is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Alandsbanken Abp A and Admicom Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admicom Oyj and Alandsbanken Abp 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 Alandsbanken Abp A are associated (or correlated) with Admicom Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admicom Oyj has no effect on the direction of Alandsbanken Abp i.e., Alandsbanken Abp and Admicom Oyj go up and down completely randomly.

Pair Corralation between Alandsbanken Abp and Admicom Oyj

Assuming the 90 days trading horizon Alandsbanken Abp A is expected to generate 0.63 times more return on investment than Admicom Oyj. However, Alandsbanken Abp A is 1.59 times less risky than Admicom Oyj. It trades about 0.21 of its potential returns per unit of risk. Admicom Oyj is currently generating about 0.11 per unit of risk. If you would invest  3,400  in Alandsbanken Abp A on November 29, 2024 and sell it today you would earn a total of  560.00  from holding Alandsbanken Abp A or generate 16.47% return on investment over 90 days.

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

Alandsbanken Abp A  vs.  Admicom Oyj

Alandsbanken Abp A

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alandsbanken Abp A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Alandsbanken Abp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Admicom Oyj

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Admicom Oyj are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Admicom Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alandsbanken Abp and Admicom Oyj

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

The idea behind Alandsbanken Abp A and Admicom Oyj 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..