Correlation Between Industrivarden and Husqvarna

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

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

Diversification Opportunities for Industrivarden and Husqvarna

0.71

Correlation Coefficient

Industrivarden  Husqvarna

Poor diversification

The 3 months correlation between Industrivarden and Husqvarna is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and Husqvarna AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Husqvarna AB and Industrivarden 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 Industrivarden AB ser are associated (or correlated) with Husqvarna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Husqvarna AB has no effect on the direction of Industrivarden i.e., Industrivarden and Husqvarna go up and down completely randomly.

Pair Corralation between Industrivarden and Husqvarna

Assuming the 90 days trading horizon Industrivarden AB ser is expected to generate 0.58 times more return on investment than Husqvarna. However, Industrivarden AB ser is 1.73 times less risky than Husqvarna. It trades about 0.03 of its potential returns per unit of risk. Husqvarna AB is currently generating about -0.03 per unit of risk. If you would invest  35,840  in Industrivarden AB ser on September 14, 2024 and sell it today you would earn a total of  560.00  from holding Industrivarden AB ser or generate 1.56% return on investment over 90 days.

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

Industrivarden AB ser  vs.  Husqvarna AB

Industrivarden AB ser

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrivarden AB ser are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Industrivarden is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Husqvarna AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Industrivarden and Husqvarna

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

The idea behind Industrivarden AB ser and Husqvarna 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.