Correlation Between Holmen AB and Holmen AB
Can any of the company-specific risk be diversified away by investing in both Holmen AB and Holmen 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 Holmen AB and Holmen AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB and Holmen AB, you can compare the effects of market volatilities on Holmen AB and Holmen 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 Holmen AB with a short position of Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and Holmen AB.
Diversification Opportunities for Holmen AB and Holmen AB
No risk reduction
The 3 months correlation between Holmen and Holmen is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB and Holmen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB and Holmen 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 Holmen AB are associated (or correlated) with Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB has no effect on the direction of Holmen AB i.e., Holmen AB and Holmen AB go up and down completely randomly.
Pair Corralation between Holmen AB and Holmen AB
Assuming the 90 days trading horizon Holmen AB is expected to generate 1.14 times less return on investment than Holmen AB. But when comparing it to its historical volatility, Holmen AB is 1.04 times less risky than Holmen AB. It trades about 0.01 of its potential returns per unit of risk. Holmen AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 42,496 in Holmen AB on February 5, 2024 and sell it today you would earn a total of 404.00 from holding Holmen AB or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holmen AB vs. Holmen AB
Performance |
| Timeline |
| Holmen AB |
| Holmen AB |
Holmen AB and Holmen AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and Holmen AB
The main advantage of trading using opposite Holmen AB and Holmen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB position performs unexpectedly, Holmen 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 Holmen AB will offset losses from the drop in Holmen AB's long position.| Holmen AB vs. Svenska Cellulosa Aktiebolaget | Holmen AB vs. BillerudKorsnas AB | Holmen AB vs. Boliden AB | Holmen AB vs. Husqvarna AB |
| Holmen AB vs. Holmen AB | Holmen AB vs. Tele2 AB | Holmen AB vs. BillerudKorsnas AB | Holmen AB vs. Svenska Cellulosa Aktiebolaget |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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