Correlation Between Eniro AB and Alfa Laval

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

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

Diversification Opportunities for Eniro AB and Alfa Laval

0.27

Correlation Coefficient

Eniro AB  Alfa Laval

Modest diversification

The 3 months correlation between Eniro and Alfa is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eniro AB and Alfa Laval AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Laval AB and Eniro 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 Eniro AB are associated (or correlated) with Alfa Laval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Laval AB has no effect on the direction of Eniro AB i.e., Eniro AB and Alfa Laval go up and down completely randomly.

Pair Corralation between Eniro AB and Alfa Laval

Assuming the 90 days trading horizon Eniro AB is expected to generate 2.46 times more return on investment than Alfa Laval. However, Eniro AB is 2.46 times more volatile than Alfa Laval AB. It trades about 0.05 of its potential returns per unit of risk. Alfa Laval AB is currently generating about -0.12 per unit of risk. If you would invest  45.00  in Eniro AB on August 31, 2024 and sell it today you would earn a total of  1.00  from holding Eniro AB or generate 2.22% return on investment over 90 days.

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

Eniro AB  vs.  Alfa Laval AB

Eniro AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eniro AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Eniro AB may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Alfa Laval AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Laval AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alfa Laval is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eniro AB and Alfa Laval

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

The idea behind Eniro AB and Alfa Laval 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.