Correlation Between Trelleborg and Resurs Holding

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

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

Diversification Opportunities for Trelleborg and Resurs Holding

0.45

Correlation Coefficient

Trelleborg  Resurs Holding

Very weak diversification

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

Pair Corralation between Trelleborg and Resurs Holding

Assuming the 90 days trading horizon Trelleborg AB is expected to generate 6.65 times more return on investment than Resurs Holding. However, Trelleborg is 6.65 times more volatile than Resurs Holding AB. It trades about 0.04 of its potential returns per unit of risk. Resurs Holding AB is currently generating about 0.01 per unit of risk. If you would invest  38,460  in Trelleborg AB on September 12, 2024 and sell it today you would earn a total of  1,500  from holding Trelleborg AB or generate 3.9% return on investment over 90 days.

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

Trelleborg AB  vs.  Resurs Holding AB

Trelleborg AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trelleborg AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Trelleborg is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Resurs Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Resurs Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Trelleborg and Resurs Holding

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

The idea behind Trelleborg AB and Resurs 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.