Correlation Between Catella AB and Insplorion

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

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

Diversification Opportunities for Catella AB and Insplorion

0.79

Correlation Coefficient

Catella AB  Insplorion

Poor diversification

The 3 months correlation between Catella and Insplorion is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Catella AB and Insplorion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insplorion AB 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 are associated (or correlated) with Insplorion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insplorion AB has no effect on the direction of Catella AB i.e., Catella AB and Insplorion go up and down completely randomly.

Pair Corralation between Catella AB and Insplorion

Assuming the 90 days trading horizon Catella AB is expected to generate 0.22 times more return on investment than Insplorion. However, Catella AB is 4.57 times less risky than Insplorion. It trades about -0.08 of its potential returns per unit of risk. Insplorion AB is currently generating about -0.21 per unit of risk. If you would invest  3,140  in Catella AB on September 1, 2024 and sell it today you would lose (240.00) from holding Catella AB or give up 7.64% of portfolio value over 90 days.

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

Catella AB  vs.  Insplorion AB

Catella AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catella 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.

Insplorion AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insplorion 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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Catella AB and Insplorion

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

The idea behind Catella AB and Insplorion 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.