Correlation Between Impact Coatings and Effnetplattformen

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

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

Diversification Opportunities for Impact Coatings and Effnetplattformen

-0.05

Correlation Coefficient

Impact Coatings  Effnetplattformen

Good diversification

The 3 months correlation between Impact and Effnetplattformen is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Impact Coatings publ and Effnetplattformen Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Effnetplattformen and Impact Coatings 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 Impact Coatings publ are associated (or correlated) with Effnetplattformen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Effnetplattformen has no effect on the direction of Impact Coatings i.e., Impact Coatings and Effnetplattformen go up and down completely randomly.

Pair Corralation between Impact Coatings and Effnetplattformen

Assuming the 90 days trading horizon Impact Coatings publ is expected to generate 1.67 times more return on investment than Effnetplattformen. However, Impact Coatings is 1.67 times more volatile than Effnetplattformen Holding AB. It trades about -0.03 of its potential returns per unit of risk. Effnetplattformen Holding AB is currently generating about -0.29 per unit of risk. If you would invest  410.00  in Impact Coatings publ on December 28, 2024 and sell it today you would lose (41.00) from holding Impact Coatings publ or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Impact Coatings publ  vs.  Effnetplattformen Holding AB

Impact Coatings publ

Risk-Adjusted Performance

Very Weak

Over the last 90 days Impact Coatings publ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Effnetplattformen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Effnetplattformen Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Impact Coatings and Effnetplattformen

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

The idea behind Impact Coatings publ and Effnetplattformen Holding 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.