Correlation Between Freemelt Holding and Crunchfish

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

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

Diversification Opportunities for Freemelt Holding and Crunchfish

0.65

Correlation Coefficient

Freemelt Holding  Crunchfish

Poor diversification

The 3 months correlation between Freemelt and Crunchfish is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Freemelt Holding AB and Crunchfish AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crunchfish AB and Freemelt Holding 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 Freemelt Holding AB are associated (or correlated) with Crunchfish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crunchfish AB has no effect on the direction of Freemelt Holding i.e., Freemelt Holding and Crunchfish go up and down completely randomly.

Pair Corralation between Freemelt Holding and Crunchfish

Assuming the 90 days trading horizon Freemelt Holding AB is expected to under-perform the Crunchfish. In addition to that, Freemelt Holding is 1.12 times more volatile than Crunchfish AB. It trades about -0.13 of its total potential returns per unit of risk. Crunchfish AB is currently generating about -0.08 per unit of volatility. If you would invest  196.00  in Crunchfish AB on September 27, 2024 and sell it today you would lose (83.00) from holding Crunchfish AB or give up 42.35% of portfolio value over 90 days.

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

Freemelt Holding AB  vs.  Crunchfish AB

Freemelt Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freemelt Holding 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Crunchfish AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crunchfish AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Freemelt Holding and Crunchfish

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

The idea behind Freemelt Holding AB and Crunchfish 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.