Correlation Between Misen Energy and ABERFORTH SMCOS

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

By analyzing existing cross correlation between Misen Energy AB and ABERFORTH SMCOS TRLS 01, you can compare the effects of market volatilities on Misen Energy and ABERFORTH SMCOS 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 Misen Energy with a short position of ABERFORTH SMCOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Misen Energy and ABERFORTH SMCOS.

Diversification Opportunities for Misen Energy and ABERFORTH SMCOS

-0.93

Correlation Coefficient

Misen Energy  ABERFORTH SMCOS

Pay attention - limited upside

The 3 months correlation between Misen and ABERFORTH is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Misen Energy AB and ABERFORTH SMCOS TRLS 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABERFORTH SMCOS TRLS and Misen Energy 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 Misen Energy AB are associated (or correlated) with ABERFORTH SMCOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABERFORTH SMCOS TRLS has no effect on the direction of Misen Energy i.e., Misen Energy and ABERFORTH SMCOS go up and down completely randomly.

Pair Corralation between Misen Energy and ABERFORTH SMCOS

Assuming the 90 days horizon Misen Energy AB is expected to under-perform the ABERFORTH SMCOS. In addition to that, Misen Energy is 15.63 times more volatile than ABERFORTH SMCOS TRLS 01. It trades about -0.39 of its total potential returns per unit of risk. ABERFORTH SMCOS TRLS 01 is currently generating about 0.16 per unit of volatility. If you would invest  1,690  in ABERFORTH SMCOS TRLS 01 on March 9, 2024 and sell it today you would earn a total of  100.00  from holding ABERFORTH SMCOS TRLS 01 or generate 5.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Misen Energy AB  vs.  ABERFORTH SMCOS TRLS 01

Misen Energy AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Misen Energy AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ABERFORTH SMCOS TRLS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ABERFORTH SMCOS TRLS 01 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ABERFORTH SMCOS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Misen Energy and ABERFORTH SMCOS

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

The idea behind Misen Energy AB and ABERFORTH SMCOS TRLS 01 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.