Correlation Between Divio Technologies and Powercell Sweden

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

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

Diversification Opportunities for Divio Technologies and Powercell Sweden

-0.4

Correlation Coefficient

Divio Technologies  Powercell Sweden

Very good diversification

The 3 months correlation between Divio and Powercell is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Divio Technologies AB and Powercell Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powercell Sweden and Divio Technologies 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 Divio Technologies AB are associated (or correlated) with Powercell Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powercell Sweden has no effect on the direction of Divio Technologies i.e., Divio Technologies and Powercell Sweden go up and down completely randomly.

Pair Corralation between Divio Technologies and Powercell Sweden

Assuming the 90 days trading horizon Divio Technologies AB is expected to generate 1.67 times more return on investment than Powercell Sweden. However, Divio Technologies is 1.67 times more volatile than Powercell Sweden. It trades about 0.17 of its potential returns per unit of risk. Powercell Sweden is currently generating about -0.03 per unit of risk. If you would invest  13.00  in Divio Technologies AB on December 1, 2024 and sell it today you would earn a total of  9.00  from holding Divio Technologies AB or generate 69.23% return on investment over 90 days.

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

Divio Technologies AB  vs.  Powercell Sweden

Divio Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Divio Technologies AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Divio Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Powercell Sweden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Powercell Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Divio Technologies and Powercell Sweden

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

The idea behind Divio Technologies AB and Powercell 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.