Correlation Between Mekonomen and Havsfrun Investment

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

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

Diversification Opportunities for Mekonomen and Havsfrun Investment

-0.25

Correlation Coefficient

Mekonomen  Havsfrun Investment

Very good diversification

The 3 months correlation between Mekonomen and Havsfrun is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Havsfrun Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Havsfrun Investment and Mekonomen 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 Mekonomen AB are associated (or correlated) with Havsfrun Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Havsfrun Investment has no effect on the direction of Mekonomen i.e., Mekonomen and Havsfrun Investment go up and down completely randomly.

Pair Corralation between Mekonomen and Havsfrun Investment

Assuming the 90 days trading horizon Mekonomen AB is expected to generate 0.82 times more return on investment than Havsfrun Investment. However, Mekonomen AB is 1.22 times less risky than Havsfrun Investment. It trades about 0.06 of its potential returns per unit of risk. Havsfrun Investment AB is currently generating about -0.02 per unit of risk. If you would invest  11,994  in Mekonomen AB on September 14, 2024 and sell it today you would earn a total of  1,746  from holding Mekonomen AB or generate 14.56% return on investment over 90 days.

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

Mekonomen AB  vs.  Havsfrun Investment AB

Mekonomen AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mekonomen AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mekonomen is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Havsfrun Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Havsfrun Investment AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Havsfrun Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mekonomen and Havsfrun Investment

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

The idea behind Mekonomen AB and Havsfrun Investment 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.