Correlation Between AB Electrolux and AQ Group

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

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

Diversification Opportunities for AB Electrolux and AQ Group

0.09

Correlation Coefficient

AB Electrolux  AQ Group

Significant diversification

The 3 months correlation between ELUX-B and AQ Group is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding AB Electrolux and AQ Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AQ Group AB and AB Electrolux 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 Electrolux are associated (or correlated) with AQ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AQ Group AB has no effect on the direction of AB Electrolux i.e., AB Electrolux and AQ Group go up and down completely randomly.

Pair Corralation between AB Electrolux and AQ Group

Assuming the 90 days trading horizon AB Electrolux is expected to generate 6.99 times less return on investment than AQ Group. In addition to that, AB Electrolux is 1.06 times more volatile than AQ Group AB. It trades about 0.02 of its total potential returns per unit of risk. AQ Group AB is currently generating about 0.12 per unit of volatility. If you would invest  54,947  in AQ Group AB on February 3, 2024 and sell it today you would earn a total of  8,553  from holding AQ Group AB or generate 15.57% return on investment over 90 days.

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

AB Electrolux  vs.  AQ Group AB

AB Electrolux

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AB Electrolux are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AB Electrolux is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

AQ Group AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AQ Group AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AQ Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AB Electrolux and AQ Group

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

The idea behind AB Electrolux and AQ Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.