Correlation Between Arjo AB and Getinge AB

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

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

Diversification Opportunities for Arjo AB and Getinge AB

-0.25

Correlation Coefficient

Arjo AB  Getinge AB

Very good diversification

The 3 months correlation between Arjo and Getinge is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Arjo AB and Getinge AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getinge AB ser and Arjo AB 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 Arjo AB are associated (or correlated) with Getinge AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getinge AB ser has no effect on the direction of Arjo AB i.e., Arjo AB and Getinge AB go up and down completely randomly.

Pair Corralation between Arjo AB and Getinge AB

Assuming the 90 days trading horizon Arjo AB is expected to under-perform the Getinge AB. In addition to that, Arjo AB is 1.1 times more volatile than Getinge AB ser. It trades about -0.22 of its total potential returns per unit of risk. Getinge AB ser is currently generating about 0.18 per unit of volatility. If you would invest  21,385  in Getinge AB ser on February 7, 2024 and sell it today you would earn a total of  1,845  from holding Getinge AB ser or generate 8.63% return on investment over 90 days.

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

Arjo AB  vs.  Getinge AB ser

Arjo AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Getinge AB ser

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Getinge AB ser are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Getinge AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arjo AB and Getinge AB

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

The idea behind Arjo AB and Getinge AB ser 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.