Correlation Between EQT AB and Modern Times

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

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

Diversification Opportunities for EQT AB and Modern Times

-0.49

Correlation Coefficient

EQT AB  Modern Times

Very good diversification

The 3 months correlation between EQT and Modern is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and Modern Times Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modern Times Group and EQT 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 EQT AB are associated (or correlated) with Modern Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modern Times Group has no effect on the direction of EQT AB i.e., EQT AB and Modern Times go up and down completely randomly.

Pair Corralation between EQT AB and Modern Times

Assuming the 90 days trading horizon EQT AB is expected to generate 5.47 times less return on investment than Modern Times. But when comparing it to its historical volatility, EQT AB is 1.29 times less risky than Modern Times. It trades about 0.03 of its potential returns per unit of risk. Modern Times Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  7,715  in Modern Times Group on September 5, 2024 and sell it today you would earn a total of  1,640  from holding Modern Times Group or generate 21.26% return on investment over 90 days.

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

EQT AB  vs.  Modern Times Group

EQT AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EQT AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EQT AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Modern Times Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Modern Times Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Modern Times unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EQT AB and Modern Times

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

The idea behind EQT AB and Modern Times Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.