Correlation Between Fodelia and Alandsbanken Abp

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Can any of the company-specific risk be diversified away by investing in both Fodelia and Alandsbanken Abp 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 Fodelia and Alandsbanken Abp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fodelia and Alandsbanken Abp A, you can compare the effects of market volatilities on Fodelia and Alandsbanken Abp 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 Fodelia with a short position of Alandsbanken Abp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fodelia and Alandsbanken Abp.

Diversification Opportunities for Fodelia and Alandsbanken Abp

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Fodelia and Alandsbanken is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Fodelia and Alandsbanken Abp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alandsbanken Abp A and Fodelia 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 Fodelia are associated (or correlated) with Alandsbanken Abp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alandsbanken Abp A has no effect on the direction of Fodelia i.e., Fodelia and Alandsbanken Abp go up and down completely randomly.

Pair Corralation between Fodelia and Alandsbanken Abp

Assuming the 90 days trading horizon Fodelia is expected to generate 1.48 times more return on investment than Alandsbanken Abp. However, Fodelia is 1.48 times more volatile than Alandsbanken Abp A. It trades about 0.07 of its potential returns per unit of risk. Alandsbanken Abp A is currently generating about 0.04 per unit of risk. If you would invest  574.00  in Fodelia on October 8, 2024 and sell it today you would earn a total of  38.00  from holding Fodelia or generate 6.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fodelia  vs.  Alandsbanken Abp A

 Performance 
       Timeline  
Fodelia 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Fodelia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Fodelia may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Alandsbanken Abp A 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Alandsbanken Abp A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Alandsbanken Abp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Fodelia and Alandsbanken Abp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fodelia and Alandsbanken Abp

The main advantage of trading using opposite Fodelia and Alandsbanken Abp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fodelia position performs unexpectedly, Alandsbanken Abp 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 Alandsbanken Abp will offset losses from the drop in Alandsbanken Abp's long position.
The idea behind Fodelia and Alandsbanken Abp A 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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