Correlation Between AVTECH Sweden and Volvo AB

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

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

Diversification Opportunities for AVTECH Sweden and Volvo AB

0.45

Correlation Coefficient

AVTECH Sweden  Volvo AB

Very weak diversification

The 3 months correlation between AVTECH and Volvo is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding AVTECH Sweden AB and Volvo AB Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volvo AB Series and AVTECH 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 AVTECH Sweden AB are associated (or correlated) with Volvo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volvo AB Series has no effect on the direction of AVTECH Sweden i.e., AVTECH Sweden and Volvo AB go up and down completely randomly.

Pair Corralation between AVTECH Sweden and Volvo AB

Assuming the 90 days trading horizon AVTECH Sweden AB is expected to generate 1.7 times more return on investment than Volvo AB. However, AVTECH Sweden is 1.7 times more volatile than Volvo AB Series. It trades about 0.49 of its potential returns per unit of risk. Volvo AB Series is currently generating about 0.09 per unit of risk. If you would invest  806.00  in AVTECH Sweden AB on April 22, 2025 and sell it today you would earn a total of  279.00  from holding AVTECH Sweden AB or generate 34.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

AVTECH Sweden AB  vs.  Volvo AB Series

AVTECH Sweden AB

Risk-Adjusted Performance

Good

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

Volvo AB Series

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Volvo AB Series are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Volvo AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AVTECH Sweden and Volvo AB

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

The idea behind AVTECH Sweden AB and Volvo AB Series 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.