Correlation Between Peab AB and John Mattson

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

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

Diversification Opportunities for Peab AB and John Mattson

-0.11

Correlation Coefficient

Peab AB  John Mattson

Good diversification

The 3 months correlation between Peab and John is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Peab AB and John Mattson Fastighetsforetag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Mattson Fastigh and Peab 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 Peab AB are associated (or correlated) with John Mattson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Mattson Fastigh has no effect on the direction of Peab AB i.e., Peab AB and John Mattson go up and down completely randomly.

Pair Corralation between Peab AB and John Mattson

Assuming the 90 days trading horizon Peab AB is expected to generate 1.43 times more return on investment than John Mattson. However, Peab AB is 1.43 times more volatile than John Mattson Fastighetsforetagen. It trades about 0.09 of its potential returns per unit of risk. John Mattson Fastighetsforetagen is currently generating about -0.02 per unit of risk. If you would invest  7,500  in Peab AB on September 12, 2024 and sell it today you would earn a total of  680.00  from holding Peab AB or generate 9.07% return on investment over 90 days.

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

Peab AB  vs.  John Mattson Fastighetsforetag

Peab AB

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Peab AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Peab AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

John Mattson Fastigh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days John Mattson Fastighetsforetagen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, John Mattson is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Peab AB and John Mattson

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

The idea behind Peab AB and John Mattson Fastighetsforetagen 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.