Correlation Between Husqvarna and Thule Group

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

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

Diversification Opportunities for Husqvarna and Thule Group

0.15

Correlation Coefficient

Husqvarna  Thule Group

Average diversification

The 3 months correlation between Husqvarna and Thule is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna AB and Thule Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thule Group AB and Husqvarna 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 Husqvarna AB are associated (or correlated) with Thule Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thule Group AB has no effect on the direction of Husqvarna i.e., Husqvarna and Thule Group go up and down completely randomly.

Pair Corralation between Husqvarna and Thule Group

Assuming the 90 days trading horizon Husqvarna AB is expected to under-perform the Thule Group. In addition to that, Husqvarna is 1.19 times more volatile than Thule Group AB. It trades about -0.1 of its total potential returns per unit of risk. Thule Group AB is currently generating about 0.04 per unit of volatility. If you would invest  34,340  in Thule Group AB on November 29, 2024 and sell it today you would earn a total of  900.00  from holding Thule Group AB or generate 2.62% return on investment over 90 days.

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

Husqvarna AB  vs.  Thule Group AB

Husqvarna AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Husqvarna AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Thule Group AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thule Group AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Thule Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Husqvarna and Thule Group

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

The idea behind Husqvarna AB and Thule Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.