Correlation Between Investor and Stillfront Group

Can any of the company-specific risk be diversified away by investing in both Investor and Stillfront Group 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 Stillfront Group 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 Stillfront Group AB, you can compare the effects of market volatilities on Investor and Stillfront Group 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 Stillfront Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Stillfront Group.

Diversification Opportunities for Investor and Stillfront Group

-0.27

Correlation Coefficient

Investor  Stillfront Group

Very good diversification

The 3 months correlation between Investor and Stillfront is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Stillfront Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stillfront Group 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 Stillfront Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stillfront Group has no effect on the direction of Investor i.e., Investor and Stillfront Group go up and down completely randomly.

Pair Corralation between Investor and Stillfront Group

Assuming the 90 days trading horizon Investor is expected to generate 52.83 times less return on investment than Stillfront Group. But when comparing it to its historical volatility, Investor AB ser is 3.81 times less risky than Stillfront Group. It trades about 0.0 of its potential returns per unit of risk. Stillfront Group AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  708.00  in Stillfront Group AB on September 3, 2024 and sell it today you would earn a total of  63.00  from holding Stillfront Group AB or generate 8.9% return on investment over 90 days.

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

Investor AB ser  vs.  Stillfront Group AB

Investor AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

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

Stillfront Group

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stillfront Group AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Stillfront Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Investor and Stillfront Group

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

The idea behind Investor AB ser and Stillfront Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.