Correlation Between Waystream Holding and AB Volvo

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

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

Diversification Opportunities for Waystream Holding and AB Volvo

-0.12

Correlation Coefficient

Waystream Holding  AB Volvo

Good diversification

The 3 months correlation between Waystream and VOLV-A is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Waystream Holding AB and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo and Waystream Holding 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 Waystream Holding 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 Waystream Holding i.e., Waystream Holding and AB Volvo go up and down completely randomly.

Pair Corralation between Waystream Holding and AB Volvo

Assuming the 90 days trading horizon Waystream Holding AB is expected to under-perform the AB Volvo. In addition to that, Waystream Holding is 3.21 times more volatile than AB Volvo. It trades about -0.05 of its total potential returns per unit of risk. AB Volvo is currently generating about -0.01 per unit of volatility. If you would invest  27,080  in AB Volvo on September 28, 2024 and sell it today you would lose (320.00) from holding AB Volvo or give up 1.18% of portfolio value over 90 days.

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

Waystream Holding AB  vs.  AB Volvo

Waystream Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waystream Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

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 Waystream Holding and AB Volvo

The main advantage of trading using opposite Waystream Holding and AB Volvo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waystream Holding 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 Waystream Holding 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.