Correlation Between Resurs Holding and Trelleborg

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

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

Diversification Opportunities for Resurs Holding and Trelleborg

0.45

Correlation Coefficient

Resurs Holding  Trelleborg

Very weak diversification

The 3 months correlation between Resurs and Trelleborg is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Resurs Holding AB and Trelleborg AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trelleborg AB and Resurs Holding 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 Resurs Holding AB are associated (or correlated) with Trelleborg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trelleborg AB has no effect on the direction of Resurs Holding i.e., Resurs Holding and Trelleborg go up and down completely randomly.

Pair Corralation between Resurs Holding and Trelleborg

Assuming the 90 days trading horizon Resurs Holding is expected to generate 72.07 times less return on investment than Trelleborg. But when comparing it to its historical volatility, Resurs Holding AB is 8.17 times less risky than Trelleborg. It trades about 0.02 of its potential returns per unit of risk. Trelleborg AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  36,880  in Trelleborg AB on December 2, 2024 and sell it today you would earn a total of  4,880  from holding Trelleborg AB or generate 13.23% return on investment over 90 days.

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

Resurs Holding AB  vs.  Trelleborg AB

Resurs Holding AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Resurs Holding AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Resurs Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Trelleborg AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trelleborg AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Trelleborg sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Resurs Holding and Trelleborg

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

The idea behind Resurs Holding AB and Trelleborg 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.