Correlation Between Fagerhult and Lindab International

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

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

Diversification Opportunities for Fagerhult and Lindab International

0.54

Correlation Coefficient

Fagerhult  Lindab International

Very weak diversification

The 3 months correlation between Fagerhult and Lindab is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fagerhult AB and Lindab International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindab International and Fagerhult 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 Fagerhult AB are associated (or correlated) with Lindab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindab International has no effect on the direction of Fagerhult i.e., Fagerhult and Lindab International go up and down completely randomly.

Pair Corralation between Fagerhult and Lindab International

Assuming the 90 days trading horizon Fagerhult AB is expected to generate 0.53 times more return on investment than Lindab International. However, Fagerhult AB is 1.88 times less risky than Lindab International. It trades about -0.1 of its potential returns per unit of risk. Lindab International AB is currently generating about -0.07 per unit of risk. If you would invest  5,780  in Fagerhult AB on November 20, 2024 and sell it today you would lose (680.00) from holding Fagerhult AB or give up 11.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.77%
Values	Daily Returns

Fagerhult AB  vs.  Lindab International AB

Fagerhult AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fagerhult 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lindab International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lindab International AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lindab International 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 Fagerhult and Lindab International

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

The idea behind Fagerhult AB and Lindab International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.