Correlation Between Fabege AB and JM AB

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

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

Diversification Opportunities for Fabege AB and JM AB

0.41

Correlation Coefficient

Fabege AB  JM AB

Very weak diversification

The 3 months correlation between Fabege and JM AB is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fabege AB and JM AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM AB and Fabege 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 Fabege AB are associated (or correlated) with JM AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM AB has no effect on the direction of Fabege AB i.e., Fabege AB and JM AB go up and down completely randomly.

Pair Corralation between Fabege AB and JM AB

Assuming the 90 days trading horizon Fabege AB is expected to generate 0.71 times more return on investment than JM AB. However, Fabege AB is 1.4 times less risky than JM AB. It trades about 0.0 of its potential returns per unit of risk. JM AB is currently generating about -0.11 per unit of risk. If you would invest  8,234  in Fabege AB on December 30, 2024 and sell it today you would lose (59.00) from holding Fabege AB or give up 0.72% of portfolio value over 90 days.

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

Fabege AB  vs.  JM AB

Fabege AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fabege AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fabege AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

JM AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days JM 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.

Pair Trading with Fabege AB and JM AB

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

The idea behind Fabege AB and JM 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.