Correlation Between Industrivarden and Waystream Holding

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

Diversification Opportunities for Industrivarden and Waystream Holding

0.45

Correlation Coefficient

Industrivarden  Waystream Holding

Very weak diversification

The 3 months correlation between Industrivarden and Waystream is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and Waystream Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waystream Holding 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 Waystream Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waystream Holding has no effect on the direction of Industrivarden i.e., Industrivarden and Waystream Holding go up and down completely randomly.

Pair Corralation between Industrivarden and Waystream Holding

Assuming the 90 days trading horizon Industrivarden AB ser is expected to generate 0.25 times more return on investment than Waystream Holding. However, Industrivarden AB ser is 4.07 times less risky than Waystream Holding. It trades about 0.06 of its potential returns per unit of risk. Waystream Holding AB is currently generating about -0.05 per unit of risk. If you would invest  25,740  in Industrivarden AB ser on September 28, 2024 and sell it today you would earn a total of  8,940  from holding Industrivarden AB ser or generate 34.73% 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.  Waystream Holding 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 uncertain 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.

Waystream Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waystream Holding 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 Waystream Holding

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

The idea behind Industrivarden AB ser and Waystream 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.