Correlation Between Troax Group and Absolent Group

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

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

Diversification Opportunities for Troax Group and Absolent Group

-0.15

Correlation Coefficient

Troax Group  Absolent Group

Good diversification

The 3 months correlation between Troax and Absolent is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Troax Group AB and Absolent Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolent Group AB and Troax Group 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 Troax Group AB are associated (or correlated) with Absolent Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolent Group AB has no effect on the direction of Troax Group i.e., Troax Group and Absolent Group go up and down completely randomly.

Pair Corralation between Troax Group and Absolent Group

Assuming the 90 days trading horizon Troax Group AB is expected to generate 1.06 times more return on investment than Absolent Group. However, Troax Group is 1.06 times more volatile than Absolent Group AB. It trades about 0.0 of its potential returns per unit of risk. Absolent Group AB is currently generating about -0.29 per unit of risk. If you would invest  21,850  in Troax Group AB on September 4, 2024 and sell it today you would lose (350.00) from holding Troax Group AB or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Troax Group AB  vs.  Absolent Group AB

Troax Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Absolent Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Absolent Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Troax Group and Absolent Group

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

The idea behind Troax Group AB and Absolent Group 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..