Correlation Between Havsfrun Investment and Litium AB

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

Diversification Opportunities for Havsfrun Investment and Litium AB

-0.64

Correlation Coefficient

Havsfrun Investment  Litium AB

Excellent diversification

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

Pair Corralation between Havsfrun Investment and Litium AB

Assuming the 90 days trading horizon Havsfrun Investment AB is expected to generate 1.24 times more return on investment than Litium AB. However, Havsfrun Investment is 1.24 times more volatile than Litium AB. It trades about 0.01 of its potential returns per unit of risk. Litium AB is currently generating about -0.13 per unit of risk. If you would invest  1,235  in Havsfrun Investment AB on September 24, 2024 and sell it today you would lose (5.00) from holding Havsfrun Investment AB or give up 0.4% of portfolio value over 90 days.

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

Havsfrun Investment AB  vs.  Litium AB

Havsfrun Investment

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Havsfrun Investment AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Havsfrun Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Litium AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Havsfrun Investment and Litium AB

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

The idea behind Havsfrun Investment AB and Litium 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.