Correlation Between Truecaller and AB Volvo

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

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

Diversification Opportunities for Truecaller and AB Volvo

0.42

Correlation Coefficient

Truecaller  AB Volvo

Very weak diversification

The 3 months correlation between Truecaller and VOLV-A is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Truecaller AB and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo and Truecaller 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 Truecaller AB are associated (or correlated) with AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of Truecaller i.e., Truecaller and AB Volvo go up and down completely randomly.

Pair Corralation between Truecaller and AB Volvo

Assuming the 90 days trading horizon Truecaller AB is expected to generate 2.72 times more return on investment than AB Volvo. However, Truecaller is 2.72 times more volatile than AB Volvo. It trades about 0.03 of its potential returns per unit of risk. AB Volvo is currently generating about 0.06 per unit of risk. If you would invest  3,877  in Truecaller AB on September 26, 2024 and sell it today you would earn a total of  1,148  from holding Truecaller AB or generate 29.61% return on investment over 90 days.

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

Truecaller AB  vs.  AB Volvo

Truecaller AB

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Truecaller AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Truecaller sustained solid returns over the last few months and may actually be approaching a breakup point.

AB Volvo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Truecaller and AB Volvo

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

The idea behind Truecaller AB and AB Volvo 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 CEOs Directory module to screen CEOs from public companies around the world.