Correlation Between Effnetplattformen and Catella AB

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

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

Diversification Opportunities for Effnetplattformen and Catella AB

-0.66

Correlation Coefficient

Effnetplattformen  Catella AB

Excellent diversification

The 3 months correlation between Effnetplattformen and Catella is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Effnetplattformen Holding AB and Catella AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catella AB and Effnetplattformen 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 Effnetplattformen Holding AB are associated (or correlated) with Catella AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catella AB has no effect on the direction of Effnetplattformen i.e., Effnetplattformen and Catella AB go up and down completely randomly.

Pair Corralation between Effnetplattformen and Catella AB

Assuming the 90 days trading horizon Effnetplattformen Holding AB is expected to under-perform the Catella AB. In addition to that, Effnetplattformen is 1.12 times more volatile than Catella AB. It trades about -0.26 of its total potential returns per unit of risk. Catella AB is currently generating about 0.13 per unit of volatility. If you would invest  2,785  in Catella AB on December 28, 2024 and sell it today you would earn a total of  415.00  from holding Catella AB or generate 14.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Effnetplattformen Holding AB  vs.  Catella AB

Effnetplattformen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Effnetplattformen 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Catella AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catella AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Catella AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Effnetplattformen and Catella AB

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

The idea behind Effnetplattformen Holding AB and Catella 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.