Correlation Between COOR Service and Train Alliance

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

By analyzing existing cross correlation between COOR Service Management and Train Alliance Sweden, you can compare the effects of market volatilities on COOR Service and Train Alliance 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 COOR Service with a short position of Train Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of COOR Service and Train Alliance.

Diversification Opportunities for COOR Service and Train Alliance

-0.23

Correlation Coefficient

COOR Service  Train Alliance

Very good diversification

The 3 months correlation between COOR and Train is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding COOR Service Management and Train Alliance Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Train Alliance Sweden and COOR Service 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 COOR Service Management are associated (or correlated) with Train Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Train Alliance Sweden has no effect on the direction of COOR Service i.e., COOR Service and Train Alliance go up and down completely randomly.

Pair Corralation between COOR Service and Train Alliance

Assuming the 90 days trading horizon COOR Service Management is expected to generate 1.53 times more return on investment than Train Alliance. However, COOR Service is 1.53 times more volatile than Train Alliance Sweden. It trades about 0.03 of its potential returns per unit of risk. Train Alliance Sweden is currently generating about -0.04 per unit of risk. If you would invest  3,308  in COOR Service Management on December 2, 2024 and sell it today you would earn a total of  72.00  from holding COOR Service Management or generate 2.18% return on investment over 90 days.

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

COOR Service Management  vs.  Train Alliance Sweden

COOR Service Management

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COOR Service Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, COOR Service is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Train Alliance Sweden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Train Alliance Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Train Alliance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with COOR Service and Train Alliance

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

The idea behind COOR Service Management and Train Alliance Sweden 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.