Correlation Between Train Alliance and Investment

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

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

Diversification Opportunities for Train Alliance and Investment

-0.2

Correlation Coefficient

Train Alliance  Investment

Good diversification

The 3 months correlation between Train and Investment is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Train Alliance Sweden and Investment AB Oresund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment AB Oresund and Train Alliance 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 Train Alliance Sweden are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment AB Oresund has no effect on the direction of Train Alliance i.e., Train Alliance and Investment go up and down completely randomly.

Pair Corralation between Train Alliance and Investment

Assuming the 90 days trading horizon Train Alliance Sweden is expected to under-perform the Investment. In addition to that, Train Alliance is 1.08 times more volatile than Investment AB Oresund. It trades about -0.04 of its total potential returns per unit of risk. Investment AB Oresund is currently generating about 0.02 per unit of volatility. If you would invest  11,260  in Investment AB Oresund on December 2, 2024 and sell it today you would earn a total of  80.00  from holding Investment AB Oresund or generate 0.71% return on investment over 90 days.

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

Train Alliance Sweden  vs.  Investment AB Oresund

Train Alliance Sweden

Risk-Adjusted Performance

Very Weak

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

Investment AB Oresund

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Investment AB Oresund are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Train Alliance and Investment

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

The idea behind Train Alliance Sweden and Investment AB Oresund 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.