Correlation Between VERISK ANLYTCS and Powercell Sweden

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

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

Diversification Opportunities for VERISK ANLYTCS and Powercell Sweden

-0.01

Correlation Coefficient

VERISK ANLYTCS  Powercell Sweden

Good diversification

The 3 months correlation between VERISK and Powercell is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding VERISK ANLYTCS A and Powercell Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powercell Sweden and VERISK ANLYTCS 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 VERISK ANLYTCS A are associated (or correlated) with Powercell Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powercell Sweden has no effect on the direction of VERISK ANLYTCS i.e., VERISK ANLYTCS and Powercell Sweden go up and down completely randomly.

Pair Corralation between VERISK ANLYTCS and Powercell Sweden

Assuming the 90 days trading horizon VERISK ANLYTCS A is expected to generate 0.22 times more return on investment than Powercell Sweden. However, VERISK ANLYTCS A is 4.6 times less risky than Powercell Sweden. It trades about 0.11 of its potential returns per unit of risk. Powercell Sweden is currently generating about 0.0 per unit of risk. If you would invest  21,450  in VERISK ANLYTCS A on September 4, 2024 and sell it today you would earn a total of  6,510  from holding VERISK ANLYTCS A or generate 30.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

VERISK ANLYTCS A  vs.  Powercell Sweden

VERISK ANLYTCS A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VERISK ANLYTCS A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, VERISK ANLYTCS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Powercell Sweden

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Powercell Sweden are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Powercell Sweden reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VERISK ANLYTCS and Powercell Sweden

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

The idea behind VERISK ANLYTCS A and Powercell Sweden 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.