Correlation Between Garo AB and Train Alliance

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

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

Diversification Opportunities for Garo AB and Train Alliance

0.57

Correlation Coefficient

Garo AB  Train Alliance

Very weak diversification

The 3 months correlation between Garo and Train is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Garo AB and Train Alliance Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Train Alliance Sweden and Garo 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 Garo AB are associated (or correlated) with Train Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Train Alliance Sweden has no effect on the direction of Garo AB i.e., Garo AB and Train Alliance go up and down completely randomly.

Pair Corralation between Garo AB and Train Alliance

Assuming the 90 days trading horizon Garo AB is expected to under-perform the Train Alliance. In addition to that, Garo AB is 1.56 times more volatile than Train Alliance Sweden. It trades about -0.14 of its total potential returns per unit of risk. Train Alliance Sweden is currently generating about -0.12 per unit of volatility. If you would invest  1,815  in Train Alliance Sweden on December 31, 2024 and sell it today you would lose (200.00) from holding Train Alliance Sweden or give up 11.02% of portfolio value over 90 days.

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

Garo AB  vs.  Train Alliance Sweden

Garo AB

Risk-Adjusted Performance

Very Weak

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

Train Alliance Sweden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Train Alliance Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Garo AB and Train Alliance

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

The idea behind Garo AB and Train Alliance Sweden 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.