Correlation Between Getlink SE and Epiroc AB

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Can any of the company-specific risk be diversified away by investing in both Getlink SE and Epiroc 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 Getlink SE and Epiroc AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Getlink SE and Epiroc AB, you can compare the effects of market volatilities on Getlink SE and Epiroc 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 Getlink SE with a short position of Epiroc AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Getlink SE and Epiroc AB.

Diversification Opportunities for Getlink SE and Epiroc AB

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Getlink and Epiroc is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Getlink SE and Epiroc AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epiroc AB and Getlink SE 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 Getlink SE are associated (or correlated) with Epiroc AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epiroc AB has no effect on the direction of Getlink SE i.e., Getlink SE and Epiroc AB go up and down completely randomly.

Pair Corralation between Getlink SE and Epiroc AB

Assuming the 90 days horizon Getlink SE is expected to under-perform the Epiroc AB. But the otc stock apears to be less risky and, when comparing its historical volatility, Getlink SE is 1.54 times less risky than Epiroc AB. The otc stock trades about -0.01 of its potential returns per unit of risk. The Epiroc AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,977  in Epiroc AB on December 30, 2023 and sell it today you would lose (93.00) from holding Epiroc AB or give up 4.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.38%
ValuesDaily Returns

Getlink SE  vs.  Epiroc AB

 Performance 
       Timeline  
Getlink SE 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Getlink SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Epiroc AB 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Epiroc AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Epiroc AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Getlink SE and Epiroc AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Getlink SE and Epiroc AB

The main advantage of trading using opposite Getlink SE and Epiroc AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getlink SE position performs unexpectedly, Epiroc 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 Epiroc AB will offset losses from the drop in Epiroc AB's long position.
The idea behind Getlink SE and Epiroc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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