Correlation Between ALK Abell and Per Aarsleff

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

By analyzing existing cross correlation between ALK Abell AS and Per Aarsleff Holding, you can compare the effects of market volatilities on ALK Abell and Per Aarsleff 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 ALK Abell with a short position of Per Aarsleff. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALK Abell and Per Aarsleff.

Diversification Opportunities for ALK Abell and Per Aarsleff

-0.48

Correlation Coefficient

ALK Abell  Per Aarsleff

Very good diversification

The 3 months correlation between ALK and Per is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding ALK Abell AS and Per Aarsleff Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Per Aarsleff Holding and ALK Abell 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 ALK Abell AS are associated (or correlated) with Per Aarsleff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Per Aarsleff Holding has no effect on the direction of ALK Abell i.e., ALK Abell and Per Aarsleff go up and down completely randomly.

Pair Corralation between ALK Abell and Per Aarsleff

Assuming the 90 days trading horizon ALK Abell AS is expected to generate 1.27 times more return on investment than Per Aarsleff. However, ALK Abell is 1.27 times more volatile than Per Aarsleff Holding. It trades about -0.07 of its potential returns per unit of risk. Per Aarsleff Holding is currently generating about -0.09 per unit of risk. If you would invest  15,480  in ALK Abell AS on October 20, 2024 and sell it today you would lose (410.00) from holding ALK Abell AS or give up 2.65% of portfolio value over 90 days.

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

ALK Abell AS  vs.  Per Aarsleff Holding

ALK Abell AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALK Abell AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Per Aarsleff Holding

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Per Aarsleff Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Per Aarsleff sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALK Abell and Per Aarsleff

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

The idea behind ALK Abell AS and Per Aarsleff Holding 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.