Correlation Between GomSpace Group and Eolus Vind

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

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

Diversification Opportunities for GomSpace Group and Eolus Vind

-0.53

Correlation Coefficient

GomSpace Group  Eolus Vind

Excellent diversification

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

Pair Corralation between GomSpace Group and Eolus Vind

Assuming the 90 days trading horizon GomSpace Group is expected to generate 13.02 times less return on investment than Eolus Vind. But when comparing it to its historical volatility, GomSpace Group AB is 1.08 times less risky than Eolus Vind. It trades about 0.01 of its potential returns per unit of risk. Eolus Vind AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,150  in Eolus Vind AB on December 2, 2024 and sell it today you would earn a total of  520.00  from holding Eolus Vind AB or generate 10.1% return on investment over 90 days.

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

GomSpace Group AB  vs.  Eolus Vind AB

GomSpace Group AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days GomSpace Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GomSpace Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Eolus Vind AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eolus Vind AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Eolus Vind sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GomSpace Group and Eolus Vind

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

The idea behind GomSpace Group AB and Eolus Vind 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.