Correlation Between C Rad and Stille AB

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

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

Diversification Opportunities for C Rad and Stille AB

0.28

Correlation Coefficient

C Rad  Stille AB

Modest diversification

The 3 months correlation between CRAD-B and Stille is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding C Rad AB and Stille AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stille AB and C Rad 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 C Rad AB are associated (or correlated) with Stille AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stille AB has no effect on the direction of C Rad i.e., C Rad and Stille AB go up and down completely randomly.

Pair Corralation between C Rad and Stille AB

Assuming the 90 days trading horizon C Rad AB is expected to under-perform the Stille AB. In addition to that, C Rad is 1.23 times more volatile than Stille AB. It trades about -0.15 of its total potential returns per unit of risk. Stille AB is currently generating about 0.04 per unit of volatility. If you would invest  20,800  in Stille AB on September 4, 2024 and sell it today you would earn a total of  900.00  from holding Stille AB or generate 4.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

C Rad AB  vs.  Stille AB

C Rad AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C Rad AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Stille AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stille AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Stille AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with C Rad and Stille AB

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

The idea behind C Rad AB and Stille 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.