Correlation Between Duni AB and Fagerhult

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

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

Diversification Opportunities for Duni AB and Fagerhult

-0.56

Correlation Coefficient

Duni AB  Fagerhult

Excellent diversification

The 3 months correlation between Duni and Fagerhult is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Duni AB and Fagerhult AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fagerhult AB and Duni 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 Duni AB are associated (or correlated) with Fagerhult. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fagerhult AB has no effect on the direction of Duni AB i.e., Duni AB and Fagerhult go up and down completely randomly.

Pair Corralation between Duni AB and Fagerhult

Assuming the 90 days trading horizon Duni AB is expected to generate 0.89 times more return on investment than Fagerhult. However, Duni AB is 1.12 times less risky than Fagerhult. It trades about 0.07 of its potential returns per unit of risk. Fagerhult AB is currently generating about -0.2 per unit of risk. If you would invest  9,430  in Duni AB on December 30, 2024 and sell it today you would earn a total of  570.00  from holding Duni AB or generate 6.04% return on investment over 90 days.

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

Duni AB  vs.  Fagerhult AB

Duni AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Duni AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Duni AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fagerhult AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fagerhult 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Duni AB and Fagerhult

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

The idea behind Duni AB and Fagerhult 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 Managers module to screen money managers from public funds and ETFs managed around the world.