Correlation Between Cell Impact and Impact Coatings

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

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

Diversification Opportunities for Cell Impact and Impact Coatings

0.34

Correlation Coefficient

Cell Impact  Impact Coatings

Weak diversification

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

Pair Corralation between Cell Impact and Impact Coatings

Assuming the 90 days horizon Cell Impact AB is expected to generate 2.23 times more return on investment than Impact Coatings. However, Cell Impact is 2.23 times more volatile than Impact Coatings publ. It trades about -0.01 of its potential returns per unit of risk. Impact Coatings publ is currently generating about -0.04 per unit of risk. If you would invest  14.00  in Cell Impact AB on December 29, 2024 and sell it today you would lose (3.00) from holding Cell Impact AB or give up 21.43% of portfolio value over 90 days.

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

Cell Impact AB  vs.  Impact Coatings publ

Cell Impact AB

Risk-Adjusted Performance

Very Weak

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

Impact Coatings publ

Risk-Adjusted Performance

Very Weak

Over the last 90 days Impact Coatings publ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with Cell Impact and Impact Coatings

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

The idea behind Cell Impact AB and Impact Coatings publ 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.