Correlation Between ASSA ABLOY and Global Digital

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

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

Diversification Opportunities for ASSA ABLOY and Global Digital

-0.59

Correlation Coefficient

ASSA ABLOY  Global Digital

Excellent diversification

The 3 months correlation between ASSA and Global is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and Global Digital Soltn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Digital Soltn and ASSA ABLOY 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 ASSA ABLOY AB are associated (or correlated) with Global Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Digital Soltn has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and Global Digital go up and down completely randomly.

Pair Corralation between ASSA ABLOY and Global Digital

If you would invest  2,861  in ASSA ABLOY AB on September 5, 2024 and sell it today you would earn a total of  225.00  from holding ASSA ABLOY AB or generate 7.86% return on investment over 90 days.

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

ASSA ABLOY AB  vs.  Global Digital Soltn

ASSA ABLOY AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASSA ABLOY AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ASSA ABLOY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Global Digital Soltn

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with ASSA ABLOY and Global Digital

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

The idea behind ASSA ABLOY AB and Global Digital Soltn 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .