Correlation Between Investor and Lipidor Ab

Can any of the company-specific risk be diversified away by investing in both Investor and Lipidor 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 Investor and Lipidor Ab 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 Lipidor Ab, you can compare the effects of market volatilities on Investor and Lipidor 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 Investor with a short position of Lipidor Ab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Lipidor Ab.

Diversification Opportunities for Investor and Lipidor Ab

-0.32

Correlation Coefficient

Investor  Lipidor Ab

Very good diversification

The 3 months correlation between Investor and Lipidor is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Lipidor Ab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipidor 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 Lipidor Ab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipidor Ab has no effect on the direction of Investor i.e., Investor and Lipidor Ab go up and down completely randomly.

Pair Corralation between Investor and Lipidor Ab

Assuming the 90 days trading horizon Investor is expected to generate 75.19 times less return on investment than Lipidor Ab. But when comparing it to its historical volatility, Investor AB ser is 5.69 times less risky than Lipidor Ab. It trades about 0.02 of its potential returns per unit of risk. Lipidor Ab is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4.62  in Lipidor Ab on September 30, 2024 and sell it today you would earn a total of  14.38  from holding Lipidor Ab or generate 311.26% return on investment over 90 days.

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

Investor AB ser  vs.  Lipidor 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 somewhat strong basic indicators, Investor is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Lipidor Ab

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lipidor Ab are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Lipidor Ab unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Investor and Lipidor Ab

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

The idea behind Investor AB ser and Lipidor 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.