Correlation Between Fram Skandinavien and Greater Than

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

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

Diversification Opportunities for Fram Skandinavien and Greater Than

0.53

Correlation Coefficient

Fram Skandinavien  Greater Than

Very weak diversification

The 3 months correlation between Fram and Greater is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Fram Skandinavien AB and Greater Than AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greater Than AB and Fram Skandinavien 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 Fram Skandinavien AB are associated (or correlated) with Greater Than. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greater Than AB has no effect on the direction of Fram Skandinavien i.e., Fram Skandinavien and Greater Than go up and down completely randomly.

Pair Corralation between Fram Skandinavien and Greater Than

Assuming the 90 days trading horizon Fram Skandinavien AB is expected to generate 0.6 times more return on investment than Greater Than. However, Fram Skandinavien AB is 1.67 times less risky than Greater Than. It trades about 0.09 of its potential returns per unit of risk. Greater Than AB is currently generating about 0.04 per unit of risk. If you would invest  800.00  in Fram Skandinavien AB on November 29, 2024 and sell it today you would earn a total of  125.00  from holding Fram Skandinavien AB or generate 15.63% return on investment over 90 days.

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

Fram Skandinavien AB  vs.  Greater Than AB

Fram Skandinavien

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fram Skandinavien AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Fram Skandinavien sustained solid returns over the last few months and may actually be approaching a breakup point.

Greater Than AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Greater Than AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Greater Than unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fram Skandinavien and Greater Than

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

The idea behind Fram Skandinavien AB and Greater Than 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.