Correlation Between Alcadon Group and Dustin Group

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

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

Diversification Opportunities for Alcadon Group and Dustin Group

0.85

Correlation Coefficient

Alcadon Group  Dustin Group

Very poor diversification

The 3 months correlation between Alcadon and Dustin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alcadon Group AB and Dustin Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dustin Group AB and Alcadon Group 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 Alcadon Group AB are associated (or correlated) with Dustin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dustin Group AB has no effect on the direction of Alcadon Group i.e., Alcadon Group and Dustin Group go up and down completely randomly.

Pair Corralation between Alcadon Group and Dustin Group

Assuming the 90 days trading horizon Alcadon Group AB is expected to generate 0.85 times more return on investment than Dustin Group. However, Alcadon Group AB is 1.18 times less risky than Dustin Group. It trades about -0.19 of its potential returns per unit of risk. Dustin Group AB is currently generating about -0.3 per unit of risk. If you would invest  4,080  in Alcadon Group AB on September 14, 2024 and sell it today you would lose (1,280) from holding Alcadon Group AB or give up 31.37% of portfolio value over 90 days.

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

Alcadon Group AB  vs.  Dustin Group AB

Alcadon Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alcadon Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Dustin Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dustin Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alcadon Group and Dustin Group

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

The idea behind Alcadon Group AB and Dustin Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.