Correlation Between Crunchfish and Freemelt Holding

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

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

Diversification Opportunities for Crunchfish and Freemelt Holding

0.65

Correlation Coefficient

Crunchfish  Freemelt Holding

Poor diversification

The 3 months correlation between Crunchfish and Freemelt is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Crunchfish AB and Freemelt Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freemelt Holding and Crunchfish 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 Crunchfish AB are associated (or correlated) with Freemelt Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freemelt Holding has no effect on the direction of Crunchfish i.e., Crunchfish and Freemelt Holding go up and down completely randomly.

Pair Corralation between Crunchfish and Freemelt Holding

Assuming the 90 days trading horizon Crunchfish AB is expected to under-perform the Freemelt Holding. In addition to that, Crunchfish is 1.39 times more volatile than Freemelt Holding AB. It trades about -0.03 of its total potential returns per unit of risk. Freemelt Holding AB is currently generating about -0.04 per unit of volatility. If you would invest  698.00  in Freemelt Holding AB on September 26, 2024 and sell it today you would lose (608.00) from holding Freemelt Holding AB or give up 87.11% of portfolio value over 90 days.

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

Crunchfish AB  vs.  Freemelt Holding AB

Crunchfish AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crunchfish AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Freemelt Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freemelt Holding 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Crunchfish and Freemelt Holding

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

The idea behind Crunchfish AB and Freemelt 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.