Correlation Between Generic Sweden and Unlimited Travel

Can any of the company-specific risk be diversified away by investing in both Generic Sweden and Unlimited Travel 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 Unlimited Travel 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 Unlimited Travel Group, you can compare the effects of market volatilities on Generic Sweden and Unlimited Travel 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 Unlimited Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generic Sweden and Unlimited Travel.

Diversification Opportunities for Generic Sweden and Unlimited Travel

0.26

Correlation Coefficient

Generic Sweden  Unlimited Travel

Modest diversification

The 3 months correlation between Generic and Unlimited is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Generic Sweden publ and Unlimited Travel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unlimited Travel 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 Unlimited Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unlimited Travel has no effect on the direction of Generic Sweden i.e., Generic Sweden and Unlimited Travel go up and down completely randomly.

Pair Corralation between Generic Sweden and Unlimited Travel

Assuming the 90 days trading horizon Generic Sweden is expected to generate 1.76 times less return on investment than Unlimited Travel. But when comparing it to its historical volatility, Generic Sweden publ is 1.06 times less risky than Unlimited Travel. It trades about 0.03 of its potential returns per unit of risk. Unlimited Travel Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  884.00  in Unlimited Travel Group on September 12, 2024 and sell it today you would earn a total of  451.00  from holding Unlimited Travel Group or generate 51.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.72%
Values	Daily Returns

Generic Sweden publ  vs.  Unlimited Travel Group

Generic Sweden publ

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Generic Sweden publ are ranked lower than 9 (%) 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.

Unlimited Travel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unlimited Travel Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Unlimited Travel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Generic Sweden and Unlimited Travel

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

The idea behind Generic Sweden publ and Unlimited Travel Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.