Correlation Between Lyckegard Group and AB Volvo

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

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

Diversification Opportunities for Lyckegard Group and AB Volvo

0.01

Correlation Coefficient

Lyckegard Group  AB Volvo

Significant diversification

The 3 months correlation between Lyckegard and VOLV-A is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lyckegard Group AB and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo and Lyckegard Group 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 Lyckegard Group AB are associated (or correlated) with AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of Lyckegard Group i.e., Lyckegard Group and AB Volvo go up and down completely randomly.

Pair Corralation between Lyckegard Group and AB Volvo

Assuming the 90 days trading horizon Lyckegard Group AB is expected to generate 1.98 times more return on investment than AB Volvo. However, Lyckegard Group is 1.98 times more volatile than AB Volvo. It trades about 0.11 of its potential returns per unit of risk. AB Volvo is currently generating about -0.3 per unit of risk. If you would invest  139.00  in Lyckegard Group AB on March 21, 2024 and sell it today you would earn a total of  8.00  from holding Lyckegard Group AB or generate 5.76% return on investment over 90 days.

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

Lyckegard Group AB  vs.  AB Volvo

Lyckegard Group AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lyckegard Group AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Lyckegard Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

AB Volvo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lyckegard Group and AB Volvo

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

The idea behind Lyckegard Group AB and AB Volvo 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..