Correlation Between Duni AB and Lifeclean International

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

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

Diversification Opportunities for Duni AB and Lifeclean International

0.62

Correlation Coefficient

Duni AB  Lifeclean International

Poor diversification

The 3 months correlation between Duni and Lifeclean is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Duni AB and Lifeclean International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeclean International and Duni 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 Duni AB are associated (or correlated) with Lifeclean International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeclean International has no effect on the direction of Duni AB i.e., Duni AB and Lifeclean International go up and down completely randomly.

Pair Corralation between Duni AB and Lifeclean International

Assuming the 90 days trading horizon Duni AB is expected to generate 0.18 times more return on investment than Lifeclean International. However, Duni AB is 5.58 times less risky than Lifeclean International. It trades about -0.07 of its potential returns per unit of risk. Lifeclean International AB is currently generating about -0.23 per unit of risk. If you would invest  9,599  in Duni AB on September 7, 2024 and sell it today you would lose (559.00) from holding Duni AB or give up 5.82% of portfolio value over 90 days.

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

Duni AB  vs.  Lifeclean International AB

Duni AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duni AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Duni AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lifeclean International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifeclean International 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 essential 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.

Pair Trading with Duni AB and Lifeclean International

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

The idea behind Duni AB and Lifeclean International 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.