Correlation Between OMX Stockholm and Azelio AB

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

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

Diversification Opportunities for OMX Stockholm and Azelio AB

0.0

Correlation Coefficient

OMX Stockholm  Azelio AB

Pay attention - limited upside

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

Pair Corralation between OMX Stockholm and Azelio AB

If you would invest  152,520  in OMX Stockholm Mid on January 31, 2024 and sell it today you would earn a total of  149.00  from holding OMX Stockholm Mid or generate 0.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

OMX Stockholm Mid  vs.  Azelio AB

Pair Trading with OMX Stockholm and Azelio AB

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

The idea behind OMX Stockholm Mid and Azelio 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.