Correlation Between Maj Invest and Cessatech

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

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

Diversification Opportunities for Maj Invest and Cessatech

0.66

Correlation Coefficient

Maj Invest  Cessatech

Poor diversification

The 3 months correlation between Maj and Cessatech is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Maj Invest Pension and Cessatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cessatech AS and Maj Invest 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 Maj Invest Pension are associated (or correlated) with Cessatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cessatech AS has no effect on the direction of Maj Invest i.e., Maj Invest and Cessatech go up and down completely randomly.

Pair Corralation between Maj Invest and Cessatech

Assuming the 90 days trading horizon Maj Invest Pension is expected to generate 0.44 times more return on investment than Cessatech. However, Maj Invest Pension is 2.25 times less risky than Cessatech. It trades about -0.12 of its potential returns per unit of risk. Cessatech AS is currently generating about -0.07 per unit of risk. If you would invest  12,803  in Maj Invest Pension on November 27, 2024 and sell it today you would lose (1,408) from holding Maj Invest Pension or give up 11.0% of portfolio value over 90 days.

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

Maj Invest Pension  vs.  Cessatech AS

Maj Invest Pension

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maj Invest Pension has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Cessatech AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cessatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Maj Invest and Cessatech

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

The idea behind Maj Invest Pension and Cessatech AS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.