Correlation Between Havsfrun Investment and Mekonomen

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

Diversification Opportunities for Havsfrun Investment and Mekonomen

-0.2

Correlation Coefficient

Havsfrun Investment  Mekonomen

Good diversification

The 3 months correlation between Havsfrun and Mekonomen is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Havsfrun Investment AB and Mekonomen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekonomen 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 Mekonomen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekonomen AB has no effect on the direction of Havsfrun Investment i.e., Havsfrun Investment and Mekonomen go up and down completely randomly.

Pair Corralation between Havsfrun Investment and Mekonomen

Assuming the 90 days trading horizon Havsfrun Investment is expected to generate 3.81 times less return on investment than Mekonomen. In addition to that, Havsfrun Investment is 1.48 times more volatile than Mekonomen AB. It trades about 0.01 of its total potential returns per unit of risk. Mekonomen AB is currently generating about 0.05 per unit of volatility. If you would invest  10,193  in Mekonomen AB on September 13, 2024 and sell it today you would earn a total of  3,367  from holding Mekonomen AB or generate 33.03% return on investment over 90 days.

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

Havsfrun Investment AB  vs.  Mekonomen AB

Havsfrun Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Havsfrun Investment AB are ranked lower than 4 (%) 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.

Mekonomen AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mekonomen AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mekonomen 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 Mekonomen

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

The idea behind Havsfrun Investment AB and Mekonomen 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.