Correlation Between Insplorion and Ellwee AB

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

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

Diversification Opportunities for Insplorion and Ellwee AB

0.74

Correlation Coefficient

Insplorion  Ellwee AB

Poor diversification

The 3 months correlation between Insplorion and Ellwee is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Insplorion AB and Ellwee AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellwee AB and Insplorion 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 Insplorion AB are associated (or correlated) with Ellwee AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellwee AB has no effect on the direction of Insplorion i.e., Insplorion and Ellwee AB go up and down completely randomly.

Pair Corralation between Insplorion and Ellwee AB

Assuming the 90 days trading horizon Insplorion AB is expected to under-perform the Ellwee AB. In addition to that, Insplorion is 2.33 times more volatile than Ellwee AB. It trades about -0.21 of its total potential returns per unit of risk. Ellwee AB is currently generating about -0.12 per unit of volatility. If you would invest  514.00  in Ellwee AB on September 1, 2024 and sell it today you would lose (110.00) from holding Ellwee AB or give up 21.4% of portfolio value over 90 days.

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

Insplorion AB  vs.  Ellwee AB

Insplorion AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insplorion 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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ellwee AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ellwee AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Insplorion and Ellwee AB

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

The idea behind Insplorion AB and Ellwee 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 Transaction History module to view history of all your transactions and understand their impact on performance.