Correlation Between Eolus Vind and Powercell Sweden

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

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

Diversification Opportunities for Eolus Vind and Powercell Sweden

-0.48

Correlation Coefficient

Eolus Vind  Powercell Sweden

Very good diversification

The 3 months correlation between Eolus and Powercell is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Eolus Vind AB and Powercell Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powercell Sweden and Eolus Vind 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 Eolus Vind 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 Eolus Vind i.e., Eolus Vind and Powercell Sweden go up and down completely randomly.

Pair Corralation between Eolus Vind and Powercell Sweden

Assuming the 90 days trading horizon Eolus Vind AB is expected to generate 0.82 times more return on investment than Powercell Sweden. However, Eolus Vind AB is 1.22 times less risky than Powercell Sweden. It trades about 0.09 of its potential returns per unit of risk. Powercell Sweden is currently generating about -0.02 per unit of risk. If you would invest  4,905  in Eolus Vind AB on November 20, 2024 and sell it today you would earn a total of  995.00  from holding Eolus Vind AB or generate 20.29% return on investment over 90 days.

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

Eolus Vind AB  vs.  Powercell Sweden

Eolus Vind AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eolus Vind AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Eolus Vind 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 comparatively stable basic indicators, Powercell Sweden is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eolus Vind and Powercell Sweden

The main advantage of trading using opposite Eolus Vind and Powercell Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eolus Vind 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 Eolus Vind 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .