Correlation Between PowerCell Sweden and ABB

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

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

Diversification Opportunities for PowerCell Sweden and ABB

0.66

Correlation Coefficient

PowerCell Sweden  ABB

Poor diversification

The 3 months correlation between PowerCell and ABB is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PowerCell Sweden AB and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB and PowerCell Sweden 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 PowerCell Sweden AB are associated (or correlated) with ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of PowerCell Sweden i.e., PowerCell Sweden and ABB go up and down completely randomly.

Pair Corralation between PowerCell Sweden and ABB

Assuming the 90 days horizon PowerCell Sweden AB is expected to generate 6.51 times more return on investment than ABB. However, PowerCell Sweden is 6.51 times more volatile than ABB. It trades about 0.08 of its potential returns per unit of risk. ABB is currently generating about 0.18 per unit of risk. If you would invest  250.00  in PowerCell Sweden AB on May 6, 2025 and sell it today you would earn a total of  66.00  from holding PowerCell Sweden AB or generate 26.4% return on investment over 90 days.

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

PowerCell Sweden AB  vs.  ABB

PowerCell Sweden

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PowerCell Sweden AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, PowerCell Sweden reported solid returns over the last few months and may actually be approaching a breakup point.

ABB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ABB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ABB showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PowerCell Sweden and ABB

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

The idea behind PowerCell Sweden AB and ABB 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.