Correlation Between Inission and Lifco AB

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

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

Diversification Opportunities for Inission and Lifco AB

0.26

Correlation Coefficient

Inission  Lifco AB

Modest diversification

The 3 months correlation between Inission and Lifco is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Inission AB and Lifco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifco AB and Inission 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 Inission AB are associated (or correlated) with Lifco AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifco AB has no effect on the direction of Inission i.e., Inission and Lifco AB go up and down completely randomly.

Pair Corralation between Inission and Lifco AB

Assuming the 90 days trading horizon Inission AB is expected to under-perform the Lifco AB. In addition to that, Inission is 1.23 times more volatile than Lifco AB. It trades about -0.15 of its total potential returns per unit of risk. Lifco AB is currently generating about -0.01 per unit of volatility. If you would invest  33,640  in Lifco AB on September 3, 2024 and sell it today you would lose (540.00) from holding Lifco AB or give up 1.61% of portfolio value over 90 days.

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

Inission AB  vs.  Lifco AB

Inission AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inission AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lifco AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifco AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Lifco AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Inission and Lifco AB

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

The idea behind Inission AB and Lifco 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.