Correlation Between Investor and Investor

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

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

Diversification Opportunities for Investor and Investor

0.67

Correlation Coefficient

Investor  Investor

Poor diversification

The 3 months correlation between Investor and Investor is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB and Investor AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB ser 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 are associated (or correlated) with Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB ser has no effect on the direction of Investor i.e., Investor and Investor go up and down completely randomly.

Pair Corralation between Investor and Investor

Assuming the 90 days horizon Investor AB is expected to under-perform the Investor. But the pink sheet apears to be less risky and, when comparing its historical volatility, Investor AB is 1.32 times less risky than Investor. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Investor AB ser is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,723  in Investor AB ser on October 22, 2024 and sell it today you would earn a total of  90.00  from holding Investor AB ser or generate 3.31% return on investment over 90 days.

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

Investor AB  vs.  Investor AB ser

Investor AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investor AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 nearly stable fundamental drivers, Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Investor and Investor

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

The idea behind Investor AB and Investor AB ser 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 Stocks Directory module to find actively traded stocks across global markets.