Correlation Between ASSA ABLOY and Assa Abloy

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

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

Diversification Opportunities for ASSA ABLOY and Assa Abloy

0.53

Correlation Coefficient

ASSA ABLOY  Assa Abloy

Very weak diversification

The 3 months correlation between ASSA and Assa is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and Assa Abloy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assa Abloy AB and ASSA ABLOY 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 ASSA ABLOY AB are associated (or correlated) with Assa Abloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assa Abloy AB has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and Assa Abloy go up and down completely randomly.

Pair Corralation between ASSA ABLOY and Assa Abloy

Assuming the 90 days horizon ASSA ABLOY AB is expected to generate 1.61 times more return on investment than Assa Abloy. However, ASSA ABLOY is 1.61 times more volatile than Assa Abloy AB. It trades about -0.13 of its potential returns per unit of risk. Assa Abloy AB is currently generating about -0.27 per unit of risk. If you would invest  3,086  in ASSA ABLOY AB on October 11, 2024 and sell it today you would lose (148.00) from holding ASSA ABLOY AB or give up 4.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

ASSA ABLOY AB  vs.  Assa Abloy AB

ASSA ABLOY AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Assa Abloy AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Assa Abloy 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 strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ASSA ABLOY and Assa Abloy

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

The idea behind ASSA ABLOY AB and Assa Abloy 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.