Correlation Between Wihlborgs Fastigheter and Fabege AB

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

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

Diversification Opportunities for Wihlborgs Fastigheter and Fabege AB

0.51

Correlation Coefficient

Wihlborgs Fastigheter  Fabege AB

Very weak diversification

The 3 months correlation between Wihlborgs and Fabege is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Wihlborgs Fastigheter AB and Fabege AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabege AB and Wihlborgs Fastigheter 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 Wihlborgs Fastigheter AB are associated (or correlated) with Fabege AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabege AB has no effect on the direction of Wihlborgs Fastigheter i.e., Wihlborgs Fastigheter and Fabege AB go up and down completely randomly.

Pair Corralation between Wihlborgs Fastigheter and Fabege AB

Assuming the 90 days trading horizon Wihlborgs Fastigheter AB is expected to generate 0.74 times more return on investment than Fabege AB. However, Wihlborgs Fastigheter AB is 1.36 times less risky than Fabege AB. It trades about 0.33 of its potential returns per unit of risk. Fabege AB is currently generating about 0.05 per unit of risk. If you would invest  9,008  in Wihlborgs Fastigheter AB on February 22, 2024 and sell it today you would earn a total of  1,012  from holding Wihlborgs Fastigheter AB or generate 11.23% return on investment over 90 days.

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

Wihlborgs Fastigheter AB  vs.  Fabege AB

Wihlborgs Fastigheter

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wihlborgs Fastigheter AB are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wihlborgs Fastigheter unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fabege AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fabege AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fabege AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wihlborgs Fastigheter and Fabege AB

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

The idea behind Wihlborgs Fastigheter AB and Fabege 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.