Correlation Between Fagerhult and Elanders

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

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

Diversification Opportunities for Fagerhult and Elanders

0.14

Correlation Coefficient

Fagerhult  Elanders

Average diversification

The 3 months correlation between Fagerhult and Elanders is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fagerhult AB and Elanders AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elanders AB and Fagerhult 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 Fagerhult AB are associated (or correlated) with Elanders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elanders AB has no effect on the direction of Fagerhult i.e., Fagerhult and Elanders go up and down completely randomly.

Pair Corralation between Fagerhult and Elanders

Assuming the 90 days trading horizon Fagerhult AB is expected to under-perform the Elanders. But the stock apears to be less risky and, when comparing its historical volatility, Fagerhult AB is 1.67 times less risky than Elanders. The stock trades about -0.17 of its potential returns per unit of risk. The Elanders AB is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  9,360  in Elanders AB on September 3, 2024 and sell it today you would lose (320.00) from holding Elanders AB or give up 3.42% of portfolio value over 90 days.

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

Fagerhult AB  vs.  Elanders AB

Fagerhult AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fagerhult AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Elanders AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elanders AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Elanders is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fagerhult and Elanders

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

The idea behind Fagerhult AB and Elanders 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.