Correlation Between Wallenstam and Ratos AB

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

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

Diversification Opportunities for Wallenstam and Ratos AB

-0.01

Correlation Coefficient

Wallenstam  Ratos AB

Good diversification

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

Pair Corralation between Wallenstam and Ratos AB

Assuming the 90 days trading horizon Wallenstam AB is expected to under-perform the Ratos AB. But the stock apears to be less risky and, when comparing its historical volatility, Wallenstam AB is 1.07 times less risky than Ratos AB. The stock trades about -0.08 of its potential returns per unit of risk. The Ratos AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,015  in Ratos AB on December 30, 2024 and sell it today you would earn a total of  337.00  from holding Ratos AB or generate 11.18% return on investment over 90 days.

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

Wallenstam AB  vs.  Ratos AB

Wallenstam AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wallenstam AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ratos AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ratos AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ratos AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wallenstam and Ratos AB

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

The idea behind Wallenstam AB and Ratos 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.