Correlation Between ALM Equity and Atrium Ljungberg

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

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

Diversification Opportunities for ALM Equity and Atrium Ljungberg

0.37

Correlation Coefficient

ALM Equity  Atrium Ljungberg

Weak diversification

The 3 months correlation between ALM and Atrium is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding ALM Equity AB and Atrium Ljungberg AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atrium Ljungberg and ALM Equity 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 ALM Equity AB are associated (or correlated) with Atrium Ljungberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atrium Ljungberg has no effect on the direction of ALM Equity i.e., ALM Equity and Atrium Ljungberg go up and down completely randomly.

Pair Corralation between ALM Equity and Atrium Ljungberg

Assuming the 90 days trading horizon ALM Equity AB is expected to generate 0.33 times more return on investment than Atrium Ljungberg. However, ALM Equity AB is 3.04 times less risky than Atrium Ljungberg. It trades about 0.16 of its potential returns per unit of risk. Atrium Ljungberg AB is currently generating about 0.0 per unit of risk. If you would invest  7,845  in ALM Equity AB on April 24, 2025 and sell it today you would earn a total of  455.00  from holding ALM Equity AB or generate 5.8% return on investment over 90 days.

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

ALM Equity AB  vs.  Atrium Ljungberg AB

ALM Equity AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALM Equity AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ALM Equity is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Atrium Ljungberg

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atrium Ljungberg AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Atrium Ljungberg is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ALM Equity and Atrium Ljungberg

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

The idea behind ALM Equity AB and Atrium Ljungberg 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.