Correlation Between USWE Sports and Idogen AB

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

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

Diversification Opportunities for USWE Sports and Idogen AB

0.0

Correlation Coefficient

USWE Sports  Idogen AB

Pay attention - limited upside

The 3 months correlation between USWE and Idogen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding USWE Sports AB and Idogen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idogen AB and USWE Sports 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 USWE Sports AB are associated (or correlated) with Idogen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idogen AB has no effect on the direction of USWE Sports i.e., USWE Sports and Idogen AB go up and down completely randomly.

Pair Corralation between USWE Sports and Idogen AB

Assuming the 90 days trading horizon USWE Sports AB is expected to under-perform the Idogen AB. But the stock apears to be less risky and, when comparing its historical volatility, USWE Sports AB is 7.39 times less risky than Idogen AB. The stock trades about -0.02 of its potential returns per unit of risk. The Idogen AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Idogen AB on October 5, 2024 and sell it today you would lose (6.00) from holding Idogen AB or give up 33.33% of portfolio value over 90 days.

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

USWE Sports AB  vs.  Idogen AB

USWE Sports AB

Risk-Adjusted Performance

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Good

Over the last 90 days USWE Sports AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, USWE Sports unveiled solid returns over the last few months and may actually be approaching a breakup point.

Idogen AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with USWE Sports and Idogen AB

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

The idea behind USWE Sports AB and Idogen 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.