Correlation Between Mekonomen and Storytel

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

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

Diversification Opportunities for Mekonomen and Storytel

0.59

Correlation Coefficient

Mekonomen  Storytel

Very weak diversification

The 3 months correlation between Mekonomen and Storytel is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Storytel AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storytel AB and Mekonomen 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 Mekonomen AB are associated (or correlated) with Storytel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storytel AB has no effect on the direction of Mekonomen i.e., Mekonomen and Storytel go up and down completely randomly.

Pair Corralation between Mekonomen and Storytel

Assuming the 90 days trading horizon Mekonomen is expected to generate 11.46 times less return on investment than Storytel. But when comparing it to its historical volatility, Mekonomen AB is 1.47 times less risky than Storytel. It trades about 0.02 of its potential returns per unit of risk. Storytel AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5,010  in Storytel AB on September 2, 2024 and sell it today you would earn a total of  1,040  from holding Storytel AB or generate 20.76% return on investment over 90 days.

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

Mekonomen AB  vs.  Storytel AB

Mekonomen AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mekonomen AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mekonomen is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Storytel AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Storytel AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Storytel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mekonomen and Storytel

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

The idea behind Mekonomen AB and Storytel 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..