Correlation Between Vestum AB and Doxa AB

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

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

Diversification Opportunities for Vestum AB and Doxa AB

-0.13

Correlation Coefficient

Vestum AB  Doxa AB

Good diversification

The 3 months correlation between Vestum and Doxa is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Vestum AB and Doxa AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doxa AB and Vestum 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 Vestum AB are associated (or correlated) with Doxa AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doxa AB has no effect on the direction of Vestum AB i.e., Vestum AB and Doxa AB go up and down completely randomly.

Pair Corralation between Vestum AB and Doxa AB

Assuming the 90 days trading horizon Vestum AB is expected to generate 1.71 times more return on investment than Doxa AB. However, Vestum AB is 1.71 times more volatile than Doxa AB. It trades about 0.05 of its potential returns per unit of risk. Doxa AB is currently generating about 0.01 per unit of risk. If you would invest  951.00  in Vestum AB on August 31, 2024 and sell it today you would earn a total of  59.00  from holding Vestum AB or generate 6.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Vestum AB  vs.  Doxa AB

Vestum AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vestum AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Vestum AB may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Doxa AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Doxa AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Doxa AB 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 Vestum AB and Doxa AB

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

The idea behind Vestum AB and Doxa 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.