Correlation Between Generic Sweden and Truecaller

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

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

Diversification Opportunities for Generic Sweden and Truecaller

0.64

Correlation Coefficient

Generic Sweden  Truecaller

Poor diversification

The 3 months correlation between Generic and Truecaller is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Generic Sweden publ and Truecaller AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truecaller AB and Generic Sweden 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 Generic Sweden publ are associated (or correlated) with Truecaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truecaller AB has no effect on the direction of Generic Sweden i.e., Generic Sweden and Truecaller go up and down completely randomly.

Pair Corralation between Generic Sweden and Truecaller

Assuming the 90 days trading horizon Generic Sweden publ is expected to generate 0.97 times more return on investment than Truecaller. However, Generic Sweden publ is 1.04 times less risky than Truecaller. It trades about 0.19 of its potential returns per unit of risk. Truecaller AB is currently generating about 0.1 per unit of risk. If you would invest  4,550  in Generic Sweden publ on October 15, 2024 and sell it today you would earn a total of  1,170  from holding Generic Sweden publ or generate 25.71% return on investment over 90 days.

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

Generic Sweden publ  vs.  Truecaller AB

Generic Sweden publ

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Generic Sweden publ are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Generic Sweden unveiled solid returns over the last few months and may actually be approaching a breakup point.

Truecaller AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Truecaller AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Truecaller sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generic Sweden and Truecaller

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

The idea behind Generic Sweden publ and Truecaller 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.