Correlation Between Centrotec and Inwido AB

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

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

Diversification Opportunities for Centrotec and Inwido AB

0.15

Correlation Coefficient

Centrotec  Inwido AB

Average diversification

The 3 months correlation between Centrotec and Inwido is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Centrotec SE and Inwido AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inwido AB and Centrotec 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 Centrotec SE are associated (or correlated) with Inwido AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inwido AB has no effect on the direction of Centrotec i.e., Centrotec and Inwido AB go up and down completely randomly.

Pair Corralation between Centrotec and Inwido AB

Assuming the 90 days trading horizon Centrotec is expected to generate 58.16 times less return on investment than Inwido AB. But when comparing it to its historical volatility, Centrotec SE is 4.08 times less risky than Inwido AB. It trades about 0.0 of its potential returns per unit of risk. Inwido AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  490.00  in Inwido AB on September 26, 2024 and sell it today you would earn a total of  1,081  from holding Inwido AB or generate 220.61% return on investment over 90 days.

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

Centrotec SE  vs.  Inwido AB

Centrotec SE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centrotec SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Centrotec may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Inwido AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inwido AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Inwido AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Centrotec and Inwido AB

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

The idea behind Centrotec SE and Inwido 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.