Correlation Between Cloetta AB and Duni AB

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

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

Diversification Opportunities for Cloetta AB and Duni AB

-0.43

Correlation Coefficient

Cloetta AB  Duni AB

Very good diversification

The 3 months correlation between Cloetta and Duni is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cloetta AB and Duni AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duni AB and Cloetta 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 Cloetta AB are associated (or correlated) with Duni AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duni AB has no effect on the direction of Cloetta AB i.e., Cloetta AB and Duni AB go up and down completely randomly.

Pair Corralation between Cloetta AB and Duni AB

Assuming the 90 days trading horizon Cloetta AB is expected to under-perform the Duni AB. But the stock apears to be less risky and, when comparing its historical volatility, Cloetta AB is 1.59 times less risky than Duni AB. The stock trades about -0.27 of its potential returns per unit of risk. The Duni AB is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  9,000  in Duni AB on October 9, 2024 and sell it today you would earn a total of  410.00  from holding Duni AB or generate 4.56% return on investment over 90 days.

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

Cloetta AB  vs.  Duni AB

Cloetta AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Duni AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duni AB 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 Cloetta AB and Duni AB

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

The idea behind Cloetta AB and Duni 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.