Correlation Between Havsfrun Investment and Invisio Communications

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

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

Diversification Opportunities for Havsfrun Investment and Invisio Communications

0.82

Correlation Coefficient

Havsfrun Investment  Invisio Communications

Very poor diversification

The 3 months correlation between Havsfrun and Invisio is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Havsfrun Investment AB and Invisio Communications AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invisio Communications and Havsfrun Investment 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 Havsfrun Investment AB are associated (or correlated) with Invisio Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invisio Communications has no effect on the direction of Havsfrun Investment i.e., Havsfrun Investment and Invisio Communications go up and down completely randomly.

Pair Corralation between Havsfrun Investment and Invisio Communications

Assuming the 90 days trading horizon Havsfrun Investment is expected to generate 1.25 times less return on investment than Invisio Communications. In addition to that, Havsfrun Investment is 1.27 times more volatile than Invisio Communications AB. It trades about 0.08 of its total potential returns per unit of risk. Invisio Communications AB is currently generating about 0.12 per unit of volatility. If you would invest  24,000  in Invisio Communications AB on September 2, 2024 and sell it today you would earn a total of  4,200  from holding Invisio Communications AB or generate 17.5% return on investment over 90 days.

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

Havsfrun Investment AB  vs.  Invisio Communications AB

Havsfrun Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Havsfrun Investment AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Havsfrun Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Invisio Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invisio Communications AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Invisio Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Havsfrun Investment and Invisio Communications

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

The idea behind Havsfrun Investment AB and Invisio Communications 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.