Correlation Between Husqvarna and ASICS

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

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

Diversification Opportunities for Husqvarna and ASICS

0.38

Correlation Coefficient

Husqvarna  ASICS

Weak diversification

The 3 months correlation between Husqvarna and ASICS is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna AB and ASICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASICS and Husqvarna 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 Husqvarna AB are associated (or correlated) with ASICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASICS has no effect on the direction of Husqvarna i.e., Husqvarna and ASICS go up and down completely randomly.

Pair Corralation between Husqvarna and ASICS

Assuming the 90 days horizon Husqvarna is expected to generate 11.31 times less return on investment than ASICS. But when comparing it to its historical volatility, Husqvarna AB is 1.04 times less risky than ASICS. It trades about 0.01 of its potential returns per unit of risk. ASICS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,496  in ASICS on January 26, 2024 and sell it today you would earn a total of  3,104  from holding ASICS or generate 207.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.36%
Values	Daily Returns

Husqvarna AB  vs.  ASICS

Husqvarna AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Husqvarna AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Husqvarna is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ASICS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASICS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, ASICS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Husqvarna and ASICS

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

The idea behind Husqvarna AB and ASICS 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.