Correlation Between Catella AB and Creades AB

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

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

Diversification Opportunities for Catella AB and Creades AB

0.21

Correlation Coefficient

Catella AB  Creades AB

Modest diversification

The 3 months correlation between Catella and Creades is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Catella AB A and Creades AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creades AB and Catella AB 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 Catella AB A are associated (or correlated) with Creades AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creades AB has no effect on the direction of Catella AB i.e., Catella AB and Creades AB go up and down completely randomly.

Pair Corralation between Catella AB and Creades AB

Assuming the 90 days trading horizon Catella AB is expected to generate 1.03 times less return on investment than Creades AB. In addition to that, Catella AB is 1.73 times more volatile than Creades AB. It trades about 0.02 of its total potential returns per unit of risk. Creades AB is currently generating about 0.03 per unit of volatility. If you would invest  6,310  in Creades AB on September 12, 2024 and sell it today you would earn a total of  1,055  from holding Creades AB or generate 16.72% return on investment over 90 days.

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

Catella AB A  vs.  Creades AB

Catella AB A

Risk-Adjusted Performance

0 of 100

Very Weak

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

Creades AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Creades AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Creades AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Catella AB and Creades AB

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

The idea behind Catella AB A and Creades 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.