Correlation Between AB Volvo and Hedera Group

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

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

Diversification Opportunities for AB Volvo and Hedera Group

-0.67

Correlation Coefficient

AB Volvo  Hedera Group

Excellent diversification

The 3 months correlation between VOLV-A and Hedera is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Hedera Group publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hedera Group publ and AB Volvo 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 AB Volvo are associated (or correlated) with Hedera Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hedera Group publ has no effect on the direction of AB Volvo i.e., AB Volvo and Hedera Group go up and down completely randomly.

Pair Corralation between AB Volvo and Hedera Group

Assuming the 90 days trading horizon AB Volvo is expected to generate 0.59 times more return on investment than Hedera Group. However, AB Volvo is 1.7 times less risky than Hedera Group. It trades about -0.07 of its potential returns per unit of risk. Hedera Group publ is currently generating about -0.08 per unit of risk. If you would invest  30,040  in AB Volvo on February 1, 2024 and sell it today you would lose (760.00) from holding AB Volvo or give up 2.53% of portfolio value over 90 days.

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

AB Volvo  vs.  Hedera Group publ

AB Volvo

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AB Volvo are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AB Volvo sustained solid returns over the last few months and may actually be approaching a breakup point.

Hedera Group publ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hedera Group publ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AB Volvo and Hedera Group

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

The idea behind AB Volvo and Hedera Group publ 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.