Correlation Between Alcadon Group and Mekonomen

Can any of the company-specific risk be diversified away by investing in both Alcadon Group and Mekonomen 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 Mekonomen 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 Mekonomen AB, you can compare the effects of market volatilities on Alcadon Group and Mekonomen 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 Mekonomen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcadon Group and Mekonomen.

Diversification Opportunities for Alcadon Group and Mekonomen

0.59

Correlation Coefficient

Alcadon Group  Mekonomen

Very weak diversification

The 3 months correlation between Alcadon and Mekonomen is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alcadon Group AB and Mekonomen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekonomen 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 Mekonomen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekonomen AB has no effect on the direction of Alcadon Group i.e., Alcadon Group and Mekonomen go up and down completely randomly.

Pair Corralation between Alcadon Group and Mekonomen

Assuming the 90 days trading horizon Alcadon Group AB is expected to under-perform the Mekonomen. In addition to that, Alcadon Group is 1.05 times more volatile than Mekonomen AB. It trades about -0.13 of its total potential returns per unit of risk. Mekonomen AB is currently generating about -0.09 per unit of volatility. If you would invest  13,260  in Mekonomen AB on December 2, 2024 and sell it today you would lose (1,160) from holding Mekonomen AB or give up 8.75% of portfolio value over 90 days.

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

Alcadon Group AB  vs.  Mekonomen AB

Alcadon Group AB

Risk-Adjusted Performance

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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Mekonomen AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mekonomen AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Alcadon Group and Mekonomen

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

The idea behind Alcadon Group AB and Mekonomen 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.