Correlation Between Havsfrun Investment and NOTE AB

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

Diversification Opportunities for Havsfrun Investment and NOTE AB

0.7

Correlation Coefficient

Havsfrun Investment  NOTE AB

Poor diversification

The 3 months correlation between Havsfrun and NOTE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Havsfrun Investment AB and NOTE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOTE 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 NOTE AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOTE AB has no effect on the direction of Havsfrun Investment i.e., Havsfrun Investment and NOTE AB go up and down completely randomly.

Pair Corralation between Havsfrun Investment and NOTE AB

Assuming the 90 days trading horizon Havsfrun Investment AB is expected to generate 3.39 times more return on investment than NOTE AB. However, Havsfrun Investment is 3.39 times more volatile than NOTE AB. It trades about 0.01 of its potential returns per unit of risk. NOTE AB is currently generating about -0.16 per unit of risk. If you would invest  1,550  in Havsfrun Investment AB on December 2, 2024 and sell it today you would lose (25.00) from holding Havsfrun Investment AB or give up 1.61% of portfolio value over 90 days.

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

Havsfrun Investment AB  vs.  NOTE AB

Havsfrun Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Havsfrun Investment AB are ranked lower than 8 (%) 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.

NOTE AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NOTE AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NOTE AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Havsfrun Investment and NOTE AB

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

The idea behind Havsfrun Investment AB and NOTE 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.