Correlation Between Lagercrantz Group and Generic Sweden

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

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

Diversification Opportunities for Lagercrantz Group and Generic Sweden

0.41

Correlation Coefficient

Lagercrantz Group  Generic Sweden

Very weak diversification

The 3 months correlation between Lagercrantz and Generic is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Lagercrantz Group AB and Generic Sweden publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Sweden publ and Lagercrantz Group 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 Lagercrantz Group AB are associated (or correlated) with Generic Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Sweden publ has no effect on the direction of Lagercrantz Group i.e., Lagercrantz Group and Generic Sweden go up and down completely randomly.

Pair Corralation between Lagercrantz Group and Generic Sweden

Assuming the 90 days trading horizon Lagercrantz Group AB is expected to generate 0.92 times more return on investment than Generic Sweden. However, Lagercrantz Group AB is 1.09 times less risky than Generic Sweden. It trades about 0.12 of its potential returns per unit of risk. Generic Sweden publ is currently generating about 0.11 per unit of risk. If you would invest  18,550  in Lagercrantz Group AB on September 24, 2024 and sell it today you would earn a total of  2,570  from holding Lagercrantz Group AB or generate 13.85% return on investment over 90 days.

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

Lagercrantz Group AB  vs.  Generic Sweden publ

Lagercrantz Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lagercrantz Group AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Lagercrantz Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Generic Sweden publ

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Generic Sweden publ are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Generic Sweden unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lagercrantz Group and Generic Sweden

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

The idea behind Lagercrantz Group AB and Generic Sweden publ 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.