Correlation Between Catella AB and Effnetplattformen

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

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

Diversification Opportunities for Catella AB and Effnetplattformen

-0.23

Correlation Coefficient

Catella AB  Effnetplattformen

Very good diversification

The 3 months correlation between Catella and Effnetplattformen is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Catella AB A and Effnetplattformen Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Effnetplattformen and Catella AB 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 Catella AB A are associated (or correlated) with Effnetplattformen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Effnetplattformen has no effect on the direction of Catella AB i.e., Catella AB and Effnetplattformen go up and down completely randomly.

Pair Corralation between Catella AB and Effnetplattformen

Assuming the 90 days trading horizon Catella AB A is expected to under-perform the Effnetplattformen. But the stock apears to be less risky and, when comparing its historical volatility, Catella AB A is 2.47 times less risky than Effnetplattformen. The stock trades about -0.02 of its potential returns per unit of risk. The Effnetplattformen Holding AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  364.00  in Effnetplattformen Holding AB on October 22, 2024 and sell it today you would lose (18.00) from holding Effnetplattformen Holding AB or give up 4.95% of portfolio value over 90 days.

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

Catella AB A  vs.  Effnetplattformen Holding AB

Catella AB A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catella AB A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Catella AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Effnetplattformen

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Effnetplattformen Holding AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Effnetplattformen may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Catella AB and Effnetplattformen

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

The idea behind Catella AB A and Effnetplattformen Holding 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.