Correlation Between Bredband2 and Havsfrun Investment

Can any of the company-specific risk be diversified away by investing in both Bredband2 and Havsfrun Investment 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 Bredband2 and Havsfrun Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bredband2 i Skandinavien and Havsfrun Investment AB, you can compare the effects of market volatilities on Bredband2 and Havsfrun Investment 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 Bredband2 with a short position of Havsfrun Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bredband2 and Havsfrun Investment.

Diversification Opportunities for Bredband2 and Havsfrun Investment

0.34

Correlation Coefficient

Bredband2  Havsfrun Investment

Weak diversification

The 3 months correlation between Bredband2 and Havsfrun is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bredband2 i Skandinavien and Havsfrun Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Havsfrun Investment and Bredband2 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 Bredband2 i Skandinavien are associated (or correlated) with Havsfrun Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Havsfrun Investment has no effect on the direction of Bredband2 i.e., Bredband2 and Havsfrun Investment go up and down completely randomly.

Pair Corralation between Bredband2 and Havsfrun Investment

Assuming the 90 days trading horizon Bredband2 is expected to generate 8.33 times less return on investment than Havsfrun Investment. But when comparing it to its historical volatility, Bredband2 i Skandinavien is 3.76 times less risky than Havsfrun Investment. It trades about 0.1 of its potential returns per unit of risk. Havsfrun Investment AB is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,245  in Havsfrun Investment AB on December 25, 2024 and sell it today you would earn a total of  1,115  from holding Havsfrun Investment AB or generate 89.56% return on investment over 90 days.

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

Bredband2 i Skandinavien  vs.  Havsfrun Investment AB

Bredband2 i Skandinavien

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bredband2 i Skandinavien are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bredband2 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Havsfrun Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Havsfrun Investment AB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Havsfrun Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bredband2 and Havsfrun Investment

The main advantage of trading using opposite Bredband2 and Havsfrun Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bredband2 position performs unexpectedly, Havsfrun Investment 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 Havsfrun Investment will offset losses from the drop in Havsfrun Investment's long position.

The idea behind Bredband2 i Skandinavien and Havsfrun Investment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.