Correlation Between Dometic Group and Lifco AB

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

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

Diversification Opportunities for Dometic Group and Lifco AB

0.29

Correlation Coefficient

Dometic Group  Lifco AB

Modest diversification

The 3 months correlation between Dometic and Lifco is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dometic Group AB and Lifco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifco AB and Dometic Group 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 Dometic Group AB are associated (or correlated) with Lifco AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifco AB has no effect on the direction of Dometic Group i.e., Dometic Group and Lifco AB go up and down completely randomly.

Pair Corralation between Dometic Group and Lifco AB

Assuming the 90 days trading horizon Dometic Group AB is expected to under-perform the Lifco AB. In addition to that, Dometic Group is 1.59 times more volatile than Lifco AB. It trades about -0.05 of its total potential returns per unit of risk. Lifco AB is currently generating about 0.03 per unit of volatility. If you would invest  32,800  in Lifco AB on September 12, 2024 and sell it today you would earn a total of  640.00  from holding Lifco AB or generate 1.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Dometic Group AB  vs.  Lifco AB

Dometic Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lifco AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lifco AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Lifco AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dometic Group and Lifco AB

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

The idea behind Dometic Group AB and Lifco 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.