Correlation Between Inwido AB and Unlimited Travel

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

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

Diversification Opportunities for Inwido AB and Unlimited Travel

0.22

Correlation Coefficient

Inwido AB  Unlimited Travel

Modest diversification

The 3 months correlation between Inwido and Unlimited is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Inwido AB and Unlimited Travel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unlimited Travel and Inwido AB 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 Inwido AB are associated (or correlated) with Unlimited Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unlimited Travel has no effect on the direction of Inwido AB i.e., Inwido AB and Unlimited Travel go up and down completely randomly.

Pair Corralation between Inwido AB and Unlimited Travel

Assuming the 90 days trading horizon Inwido AB is expected to under-perform the Unlimited Travel. But the stock apears to be less risky and, when comparing its historical volatility, Inwido AB is 1.65 times less risky than Unlimited Travel. The stock trades about -0.07 of its potential returns per unit of risk. The Unlimited Travel Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,260  in Unlimited Travel Group on September 23, 2024 and sell it today you would earn a total of  70.00  from holding Unlimited Travel Group or generate 5.56% return on investment over 90 days.

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

Inwido AB  vs.  Unlimited Travel Group

Inwido AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inwido AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Inwido AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Unlimited Travel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Unlimited Travel Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Unlimited Travel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Inwido AB and Unlimited Travel

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

The idea behind Inwido AB and Unlimited Travel Group 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.