Correlation Between Smart Eye and AroCell AB

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

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

Diversification Opportunities for Smart Eye and AroCell AB

-0.62

Correlation Coefficient

Smart Eye  AroCell AB

Excellent diversification

The 3 months correlation between Smart and AroCell is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Smart Eye AB and AroCell AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AroCell AB and Smart Eye 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 Smart Eye AB are associated (or correlated) with AroCell AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AroCell AB has no effect on the direction of Smart Eye i.e., Smart Eye and AroCell AB go up and down completely randomly.

Pair Corralation between Smart Eye and AroCell AB

Assuming the 90 days trading horizon Smart Eye AB is expected to under-perform the AroCell AB. But the stock apears to be less risky and, when comparing its historical volatility, Smart Eye AB is 1.04 times less risky than AroCell AB. The stock trades about -0.01 of its potential returns per unit of risk. The AroCell AB is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  38.00  in AroCell AB on November 30, 2024 and sell it today you would earn a total of  20.00  from holding AroCell AB or generate 52.63% return on investment over 90 days.

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

Smart Eye AB  vs.  AroCell AB

Smart Eye AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smart Eye AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Smart Eye is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

AroCell AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AroCell AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AroCell AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smart Eye and AroCell AB

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

The idea behind Smart Eye AB and AroCell 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.