Correlation Between TF Bank and Creades AB

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

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

Diversification Opportunities for TF Bank and Creades AB

-0.5

Correlation Coefficient

TF Bank  Creades AB

Very good diversification

The 3 months correlation between TFBANK and Creades is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding TF Bank AB and Creades AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creades AB and TF Bank 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 TF Bank AB are associated (or correlated) with Creades AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creades AB has no effect on the direction of TF Bank i.e., TF Bank and Creades AB go up and down completely randomly.

Pair Corralation between TF Bank and Creades AB

Assuming the 90 days trading horizon TF Bank AB is expected to under-perform the Creades AB. In addition to that, TF Bank is 1.31 times more volatile than Creades AB. It trades about -0.04 of its total potential returns per unit of risk. Creades AB is currently generating about 0.09 per unit of volatility. If you would invest  7,178  in Creades AB on December 30, 2024 and sell it today you would earn a total of  797.00  from holding Creades AB or generate 11.1% return on investment over 90 days.

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

TF Bank AB  vs.  Creades AB

TF Bank AB

Risk-Adjusted Performance

Very Weak

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

Creades AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Creades AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Creades AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TF Bank and Creades AB

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

The idea behind TF Bank AB and Creades 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..