Correlation Between Diadrom Holding and Fingerprint Cards
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Diadrom Holding AB vs. Fingerprint Cards AB
Performance |
Timeline |
Diadrom Holding AB |
Fingerprint Cards |
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.Diadrom Holding vs. Generic Sweden publ | Diadrom Holding vs. Avensia publ AB | Diadrom Holding vs. Softronic AB | Diadrom Holding vs. Drillcon AB |
Fingerprint Cards vs. GomSpace Group AB | Fingerprint Cards vs. Precise Biometrics AB | Fingerprint Cards vs. Pandora AS | Fingerprint Cards vs. Bavarian Nordic |
Check out your portfolio center.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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