Correlation Between Industrivarden and Alcadon Group

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

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

Diversification Opportunities for Industrivarden and Alcadon Group

0.46

Correlation Coefficient

Industrivarden  Alcadon Group

Very weak diversification

The 3 months correlation between Industrivarden and Alcadon is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and Alcadon Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcadon Group AB and Industrivarden 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 Industrivarden AB ser are associated (or correlated) with Alcadon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcadon Group AB has no effect on the direction of Industrivarden i.e., Industrivarden and Alcadon Group go up and down completely randomly.

Pair Corralation between Industrivarden and Alcadon Group

Assuming the 90 days trading horizon Industrivarden AB ser is expected to under-perform the Alcadon Group. But the stock apears to be less risky and, when comparing its historical volatility, Industrivarden AB ser is 1.24 times less risky than Alcadon Group. The stock trades about -0.23 of its potential returns per unit of risk. The Alcadon Group AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,820  in Alcadon Group AB on September 26, 2024 and sell it today you would earn a total of  20.00  from holding Alcadon Group AB or generate 0.71% return on investment over 90 days.

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

Industrivarden AB ser  vs.  Alcadon Group AB

Industrivarden AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alcadon Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Industrivarden and Alcadon Group

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

The idea behind Industrivarden AB ser and Alcadon 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.

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.