Correlation Between Trelleborg and Investment

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

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

Diversification Opportunities for Trelleborg and Investment

0.44

Correlation Coefficient

Trelleborg  Investment

Very weak diversification

The 3 months correlation between Trelleborg and Investment is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Trelleborg AB and Investment AB Oresund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment AB Oresund and Trelleborg 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 Trelleborg AB are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment AB Oresund has no effect on the direction of Trelleborg i.e., Trelleborg and Investment go up and down completely randomly.

Pair Corralation between Trelleborg and Investment

Assuming the 90 days trading horizon Trelleborg AB is expected to generate 1.21 times more return on investment than Investment. However, Trelleborg is 1.21 times more volatile than Investment AB Oresund. It trades about 0.02 of its potential returns per unit of risk. Investment AB Oresund is currently generating about -0.1 per unit of risk. If you would invest  38,940  in Trelleborg AB on September 15, 2024 and sell it today you would earn a total of  340.00  from holding Trelleborg AB or generate 0.87% return on investment over 90 days.

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

Trelleborg AB  vs.  Investment AB Oresund

Trelleborg AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trelleborg AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Trelleborg is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Investment AB Oresund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investment AB Oresund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Trelleborg and Investment

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

The idea behind Trelleborg AB and Investment AB Oresund 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.