Correlation Between Lidds AB and Insplorion

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

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

Diversification Opportunities for Lidds AB and Insplorion

0.14

Correlation Coefficient

Lidds AB  Insplorion

Average diversification

The 3 months correlation between Lidds and Insplorion is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lidds AB and Insplorion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insplorion AB and Lidds 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 Lidds AB are associated (or correlated) with Insplorion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insplorion AB has no effect on the direction of Lidds AB i.e., Lidds AB and Insplorion go up and down completely randomly.

Pair Corralation between Lidds AB and Insplorion

Assuming the 90 days trading horizon Lidds AB is expected to under-perform the Insplorion. In addition to that, Lidds AB is 1.86 times more volatile than Insplorion AB. It trades about -0.06 of its total potential returns per unit of risk. Insplorion AB is currently generating about 0.06 per unit of volatility. If you would invest  42.00  in Insplorion AB on December 1, 2024 and sell it today you would earn a total of  2.00  from holding Insplorion AB or generate 4.76% return on investment over 90 days.

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

Lidds AB  vs.  Insplorion AB

Lidds AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lidds AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lidds AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Insplorion AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Insplorion AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Insplorion unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lidds AB and Insplorion

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

The idea behind Lidds AB and Insplorion 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.