Correlation Between Investor and Catella AB

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

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

Diversification Opportunities for Investor and Catella AB

0.36

Correlation Coefficient

Investor  Catella AB

Weak diversification

The 3 months correlation between Investor and Catella is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Catella AB A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catella AB A and Investor 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 Investor AB ser 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 A has no effect on the direction of Investor i.e., Investor and Catella AB go up and down completely randomly.

Pair Corralation between Investor and Catella AB

Assuming the 90 days trading horizon Investor AB ser is expected to generate 0.3 times more return on investment than Catella AB. However, Investor AB ser is 3.31 times less risky than Catella AB. It trades about 0.04 of its potential returns per unit of risk. Catella AB A is currently generating about -0.08 per unit of risk. If you would invest  29,673  in Investor AB ser on September 12, 2024 and sell it today you would earn a total of  527.00  from holding Investor AB ser or generate 1.78% return on investment over 90 days.

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

Investor AB ser  vs.  Catella AB A

Investor AB ser

Risk-Adjusted Performance

2 of 100

Weak

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

Catella AB A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catella AB A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Investor and Catella AB

The main advantage of trading using opposite Investor and Catella AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor 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 Investor AB ser and Catella AB A 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.