Correlation Between Diadrom Holding and Fingerprint Cards

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Can any of the company-specific risk be diversified away by investing in both Diadrom Holding and Fingerprint Cards 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 Diadrom Holding and Fingerprint Cards into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diadrom Holding AB and Fingerprint Cards AB, you can compare the effects of market volatilities on Diadrom Holding and Fingerprint Cards 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 Diadrom Holding with a short position of Fingerprint Cards. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diadrom Holding and Fingerprint Cards.

Diversification Opportunities for Diadrom Holding and Fingerprint Cards

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Diadrom and Fingerprint is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Diadrom Holding AB and Fingerprint Cards AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fingerprint Cards and Diadrom Holding 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 Diadrom Holding AB are associated (or correlated) with Fingerprint Cards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fingerprint Cards has no effect on the direction of Diadrom Holding i.e., Diadrom Holding and Fingerprint Cards go up and down completely randomly.

Pair Corralation between Diadrom Holding and Fingerprint Cards

Assuming the 90 days trading horizon Diadrom Holding AB is expected to generate 0.22 times more return on investment than Fingerprint Cards. However, Diadrom Holding AB is 4.5 times less risky than Fingerprint Cards. It trades about 0.27 of its potential returns per unit of risk. Fingerprint Cards AB is currently generating about -0.11 per unit of risk. If you would invest  668.00  in Diadrom Holding AB on October 15, 2024 and sell it today you would earn a total of  92.00  from holding Diadrom Holding AB or generate 13.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Diadrom Holding AB  vs.  Fingerprint Cards AB

 Performance 
       Timeline  
Diadrom Holding AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Diadrom Holding 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Fingerprint Cards 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fingerprint Cards AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Diadrom Holding and Fingerprint Cards Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Diadrom Holding and Fingerprint Cards

The main advantage of trading using opposite Diadrom Holding and Fingerprint Cards positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diadrom Holding position performs unexpectedly, Fingerprint Cards 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 Fingerprint Cards will offset losses from the drop in Fingerprint Cards' long position.
The idea behind Diadrom Holding AB and Fingerprint Cards 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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