Correlation Between EQT AB and Arctic Gold

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

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

Diversification Opportunities for EQT AB and Arctic Gold

-0.6

Correlation Coefficient

EQT AB  Arctic Gold

Excellent diversification

The 3 months correlation between EQT and Arctic is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and Arctic Gold Publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Gold Publ and EQT 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 EQT AB are associated (or correlated) with Arctic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Gold Publ has no effect on the direction of EQT AB i.e., EQT AB and Arctic Gold go up and down completely randomly.

Pair Corralation between EQT AB and Arctic Gold

Assuming the 90 days trading horizon EQT AB is expected to under-perform the Arctic Gold. But the stock apears to be less risky and, when comparing its historical volatility, EQT AB is 6.57 times less risky than Arctic Gold. The stock trades about -0.21 of its potential returns per unit of risk. The Arctic Gold Publ is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Arctic Gold Publ on February 2, 2024 and sell it today you would earn a total of  7.00  from holding Arctic Gold Publ or generate 31.82% return on investment over 90 days.

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

EQT AB  vs.  Arctic Gold Publ

EQT AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EQT AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, EQT AB may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Arctic Gold Publ

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Gold Publ are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Arctic Gold may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with EQT AB and Arctic Gold

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

The idea behind EQT AB and Arctic Gold 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.