Correlation Between TF Bank and Qleanair Holding

Can any of the company-specific risk be diversified away by investing in both TF Bank and Qleanair Holding 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 Qleanair Holding 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 Qleanair Holding AB, you can compare the effects of market volatilities on TF Bank and Qleanair Holding 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 Qleanair Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of TF Bank and Qleanair Holding.

Diversification Opportunities for TF Bank and Qleanair Holding

-0.77

Correlation Coefficient

TF Bank  Qleanair Holding

Pay attention - limited upside

The 3 months correlation between TFBANK and Qleanair is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding TF Bank AB and Qleanair Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qleanair Holding 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 Qleanair Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qleanair Holding has no effect on the direction of TF Bank i.e., TF Bank and Qleanair Holding go up and down completely randomly.

Pair Corralation between TF Bank and Qleanair Holding

Assuming the 90 days trading horizon TF Bank AB is expected to generate 0.49 times more return on investment than Qleanair Holding. However, TF Bank AB is 2.03 times less risky than Qleanair Holding. It trades about 0.26 of its potential returns per unit of risk. Qleanair Holding AB is currently generating about -0.35 per unit of risk. If you would invest  31,200  in TF Bank AB on September 1, 2024 and sell it today you would earn a total of  3,500  from holding TF Bank AB or generate 11.22% return on investment over 90 days.

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

TF Bank AB  vs.  Qleanair Holding AB

TF Bank AB

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TF Bank AB are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, TF Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Qleanair Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qleanair Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with TF Bank and Qleanair Holding

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

The idea behind TF Bank AB and Qleanair Holding 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.