Correlation Between Arctic Gold and Avensia Publ

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

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

Diversification Opportunities for Arctic Gold and Avensia Publ

0.06

Correlation Coefficient

Arctic Gold  Avensia Publ

Significant diversification

The 3 months correlation between Arctic and Avensia is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Gold Publ and Avensia publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avensia publ AB and Arctic Gold 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 Arctic Gold Publ are associated (or correlated) with Avensia Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avensia publ AB has no effect on the direction of Arctic Gold i.e., Arctic Gold and Avensia Publ go up and down completely randomly.

Pair Corralation between Arctic Gold and Avensia Publ

Assuming the 90 days trading horizon Arctic Gold Publ is expected to generate 3.24 times more return on investment than Avensia Publ. However, Arctic Gold is 3.24 times more volatile than Avensia publ AB. It trades about 0.02 of its potential returns per unit of risk. Avensia publ AB is currently generating about -0.05 per unit of risk. If you would invest  27.00  in Arctic Gold Publ on September 5, 2024 and sell it today you would lose (1.00) from holding Arctic Gold Publ or give up 3.7% of portfolio value over 90 days.

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

Arctic Gold Publ  vs.  Avensia publ AB

Arctic Gold Publ

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Gold Publ are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Arctic Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Avensia publ AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avensia publ AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Arctic Gold and Avensia Publ

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

The idea behind Arctic Gold Publ and Avensia publ 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.