Correlation Between Atrium Ljungberg and Peab AB

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

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

Diversification Opportunities for Atrium Ljungberg and Peab AB

-0.24

Correlation Coefficient

Atrium Ljungberg  Peab AB

Very good diversification

The 3 months correlation between Atrium and Peab is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Atrium Ljungberg AB and Peab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peab AB and Atrium Ljungberg 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 Atrium Ljungberg AB are associated (or correlated) with Peab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peab AB has no effect on the direction of Atrium Ljungberg i.e., Atrium Ljungberg and Peab AB go up and down completely randomly.

Pair Corralation between Atrium Ljungberg and Peab AB

Assuming the 90 days trading horizon Atrium Ljungberg AB is expected to under-perform the Peab AB. But the stock apears to be less risky and, when comparing its historical volatility, Atrium Ljungberg AB is 1.12 times less risky than Peab AB. The stock trades about -0.11 of its potential returns per unit of risk. The Peab AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,465  in Peab AB on September 4, 2024 and sell it today you would earn a total of  595.00  from holding Peab AB or generate 7.97% return on investment over 90 days.

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

Atrium Ljungberg AB  vs.  Peab AB

Atrium Ljungberg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atrium Ljungberg AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

Peab AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Peab AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Peab AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Atrium Ljungberg and Peab AB

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

The idea behind Atrium Ljungberg AB and Peab 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.