Correlation Between Alfa Laval and Metacon AB

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

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

Diversification Opportunities for Alfa Laval and Metacon AB

0.0

Correlation Coefficient

Alfa Laval  Metacon AB

Pay attention - limited upside

The 3 months correlation between Alfa and Metacon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Laval AB and Metacon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metacon AB and Alfa Laval 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 Alfa Laval AB are associated (or correlated) with Metacon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metacon AB has no effect on the direction of Alfa Laval i.e., Alfa Laval and Metacon AB go up and down completely randomly.

Pair Corralation between Alfa Laval and Metacon AB

If you would invest  40,717  in Alfa Laval AB on March 12, 2024 and sell it today you would earn a total of  7,363  from holding Alfa Laval AB or generate 18.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Alfa Laval AB  vs.  Metacon AB

Alfa Laval AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Laval AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alfa Laval unveiled solid returns over the last few months and may actually be approaching a breakup point.

Metacon AB

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Metacon AB are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Metacon AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alfa Laval and Metacon AB

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

The idea behind Alfa Laval AB and Metacon 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.