Correlation Between Online Brands and Idun Industrier

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

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

Diversification Opportunities for Online Brands and Idun Industrier

0.29

Correlation Coefficient

Online Brands  Idun Industrier

Modest diversification

The 3 months correlation between Online and Idun is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Online Brands Nordic and Idun Industrier AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idun Industrier AB and Online Brands 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 Online Brands Nordic are associated (or correlated) with Idun Industrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idun Industrier AB has no effect on the direction of Online Brands i.e., Online Brands and Idun Industrier go up and down completely randomly.

Pair Corralation between Online Brands and Idun Industrier

Assuming the 90 days trading horizon Online Brands Nordic is expected to under-perform the Idun Industrier. In addition to that, Online Brands is 2.22 times more volatile than Idun Industrier AB. It trades about -0.07 of its total potential returns per unit of risk. Idun Industrier AB is currently generating about 0.29 per unit of volatility. If you would invest  29,600  in Idun Industrier AB on October 20, 2024 and sell it today you would earn a total of  2,600  from holding Idun Industrier AB or generate 8.78% return on investment over 90 days.

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

Online Brands Nordic  vs.  Idun Industrier AB

Online Brands Nordic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Online Brands Nordic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Online Brands may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Idun Industrier AB

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Idun Industrier AB are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Idun Industrier sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Online Brands and Idun Industrier

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

The idea behind Online Brands Nordic and Idun Industrier 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.