Correlation Between Garo AB and Akelius Residential

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

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

Diversification Opportunities for Garo AB and Akelius Residential

0.41

Correlation Coefficient

Garo AB  Akelius Residential

Very weak diversification

The 3 months correlation between Garo and Akelius is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Garo AB and Akelius Residential Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akelius Residential and Garo 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 Garo AB are associated (or correlated) with Akelius Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akelius Residential has no effect on the direction of Garo AB i.e., Garo AB and Akelius Residential go up and down completely randomly.

Pair Corralation between Garo AB and Akelius Residential

Assuming the 90 days trading horizon Garo AB is expected to under-perform the Akelius Residential. In addition to that, Garo AB is 4.11 times more volatile than Akelius Residential Property. It trades about -0.06 of its total potential returns per unit of risk. Akelius Residential Property is currently generating about -0.05 per unit of volatility. If you would invest  168.00  in Akelius Residential Property on September 5, 2024 and sell it today you would lose (4.00) from holding Akelius Residential Property or give up 2.38% of portfolio value over 90 days.

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

Garo AB  vs.  Akelius Residential Property

Garo AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Akelius Residential

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akelius Residential Property has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Akelius Residential is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Garo AB and Akelius Residential

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

The idea behind Garo AB and Akelius Residential Property 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.