Correlation Between Investor and Alcadon Group

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

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

Diversification Opportunities for Investor and Alcadon Group

0.76

Correlation Coefficient

Investor  Alcadon Group

Poor diversification

The 3 months correlation between Investor and Alcadon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Investor 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 Investor 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 Investor 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 Investor i.e., Investor and Alcadon Group go up and down completely randomly.

Pair Corralation between Investor and Alcadon Group

Assuming the 90 days trading horizon Investor AB ser is expected to under-perform the Alcadon Group. But the stock apears to be less risky and, when comparing its historical volatility, Investor AB ser is 1.39 times less risky than Alcadon Group. The stock trades about -0.13 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	Significant
Accuracy	100.0%
Values	Daily Returns

Investor AB ser  vs.  Alcadon Group AB

Investor AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investor AB ser has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 Investor and Alcadon Group

The main advantage of trading using opposite Investor and Alcadon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor 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 Investor 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.

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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.