Correlation Between Cloetta AB and Fagerhult

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

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

Diversification Opportunities for Cloetta AB and Fagerhult

-0.57

Correlation Coefficient

Cloetta AB  Fagerhult

Excellent diversification

The 3 months correlation between Cloetta and Fagerhult is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cloetta AB and Fagerhult AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fagerhult 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 Fagerhult. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fagerhult AB has no effect on the direction of Cloetta AB i.e., Cloetta AB and Fagerhult go up and down completely randomly.

Pair Corralation between Cloetta AB and Fagerhult

Assuming the 90 days trading horizon Cloetta AB is expected to generate 1.06 times more return on investment than Fagerhult. However, Cloetta AB is 1.06 times more volatile than Fagerhult AB. It trades about 0.1 of its potential returns per unit of risk. Fagerhult AB is currently generating about -0.18 per unit of risk. If you would invest  2,524  in Cloetta AB on December 25, 2024 and sell it today you would earn a total of  262.00  from holding Cloetta AB or generate 10.38% 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.  Fagerhult AB

Cloetta AB

Risk-Adjusted Performance

OK

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

Fagerhult AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fagerhult 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cloetta AB and Fagerhult

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

The idea behind Cloetta AB and Fagerhult 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..