Correlation Between Creades AB and Catella AB

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

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

Diversification Opportunities for Creades AB and Catella AB

0.34

Correlation Coefficient

Creades AB  Catella AB

Weak diversification

The 3 months correlation between Creades and Catella is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Creades AB and Catella AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catella AB and Creades 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 Creades AB are associated (or correlated) with Catella AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catella AB has no effect on the direction of Creades AB i.e., Creades AB and Catella AB go up and down completely randomly.

Pair Corralation between Creades AB and Catella AB

Assuming the 90 days trading horizon Creades AB is expected to generate 1.51 times more return on investment than Catella AB. However, Creades AB is 1.51 times more volatile than Catella AB. It trades about 0.06 of its potential returns per unit of risk. Catella AB is currently generating about -0.11 per unit of risk. If you would invest  6,922  in Creades AB on September 12, 2024 and sell it today you would earn a total of  443.00  from holding Creades AB or generate 6.4% return on investment over 90 days.

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

Creades AB  vs.  Catella AB

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.

Catella AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Creades AB and Catella 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.