Correlation Between Creades AB and TF Bank

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

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

Diversification Opportunities for Creades AB and TF Bank

-0.25

Correlation Coefficient

Creades AB  TF Bank

Very good diversification

The 3 months correlation between Creades and TFBANK is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Creades AB and TF Bank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TF Bank AB and Creades 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 Creades AB are associated (or correlated) with TF Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TF Bank AB has no effect on the direction of Creades AB i.e., Creades AB and TF Bank go up and down completely randomly.

Pair Corralation between Creades AB and TF Bank

Assuming the 90 days trading horizon Creades AB is expected to under-perform the TF Bank. But the stock apears to be less risky and, when comparing its historical volatility, Creades AB is 1.11 times less risky than TF Bank. The stock trades about -0.03 of its potential returns per unit of risk. The TF Bank AB is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  24,700  in TF Bank AB on September 1, 2024 and sell it today you would earn a total of  10,000  from holding TF Bank AB or generate 40.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Creades AB  vs.  TF Bank AB

Creades AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

TF Bank AB

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TF Bank AB are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, TF Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Creades AB and TF Bank

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

The idea behind Creades AB and TF Bank 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.