Correlation Between Mekonomen and Vestum AB

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

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

Diversification Opportunities for Mekonomen and Vestum AB

0.0

Correlation Coefficient

Mekonomen  Vestum AB

Pay attention - limited upside

The 3 months correlation between Mekonomen and Vestum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Vestum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestum 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 Vestum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestum AB has no effect on the direction of Mekonomen i.e., Mekonomen and Vestum AB go up and down completely randomly.

Pair Corralation between Mekonomen and Vestum AB

If you would invest (100.00) in Vestum AB on October 23, 2024 and sell it today you would earn a total of  100.00  from holding Vestum AB or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Mekonomen AB  vs.  Vestum AB

Mekonomen AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mekonomen AB has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Vestum AB

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Vestum AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vestum AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mekonomen and Vestum AB

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

The idea behind Mekonomen AB and Vestum 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.