Correlation Between Fingerprint Cards and ASSA ABLOY

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

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

Diversification Opportunities for Fingerprint Cards and ASSA ABLOY

-0.83

Correlation Coefficient

Fingerprint Cards  ASSA ABLOY

Pay attention - limited upside

The 3 months correlation between Fingerprint and ASSA is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fingerprint Cards AB and ASSA ABLOY AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASSA ABLOY AB and Fingerprint Cards 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 Fingerprint Cards AB are associated (or correlated) with ASSA ABLOY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASSA ABLOY AB has no effect on the direction of Fingerprint Cards i.e., Fingerprint Cards and ASSA ABLOY go up and down completely randomly.

Pair Corralation between Fingerprint Cards and ASSA ABLOY

Assuming the 90 days trading horizon Fingerprint Cards AB is expected to under-perform the ASSA ABLOY. In addition to that, Fingerprint Cards is 2.32 times more volatile than ASSA ABLOY AB. It trades about -0.11 of its total potential returns per unit of risk. ASSA ABLOY AB is currently generating about -0.05 per unit of volatility. If you would invest  30,296  in ASSA ABLOY AB on January 30, 2024 and sell it today you would lose (346.00) from holding ASSA ABLOY AB or give up 1.14% of portfolio value over 90 days.

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

Fingerprint Cards AB  vs.  ASSA ABLOY AB

Fingerprint Cards

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fingerprint Cards AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

ASSA ABLOY AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASSA ABLOY AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ASSA ABLOY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fingerprint Cards and ASSA ABLOY

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

The idea behind Fingerprint Cards AB and ASSA ABLOY 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.