Correlation Between Footway Group and Aegirbio

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

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

Diversification Opportunities for Footway Group and Aegirbio

-0.25

Correlation Coefficient

Footway Group  Aegirbio

Very good diversification

The 3 months correlation between Footway and Aegirbio is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Footway Group AB and Aegirbio AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegirbio AB and Footway Group 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 Footway Group AB are associated (or correlated) with Aegirbio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegirbio AB has no effect on the direction of Footway Group i.e., Footway Group and Aegirbio go up and down completely randomly.

Pair Corralation between Footway Group and Aegirbio

Assuming the 90 days trading horizon Footway Group AB is expected to generate 0.8 times more return on investment than Aegirbio. However, Footway Group AB is 1.25 times less risky than Aegirbio. It trades about 0.04 of its potential returns per unit of risk. Aegirbio AB is currently generating about -0.44 per unit of risk. If you would invest  4,140  in Footway Group AB on February 5, 2024 and sell it today you would earn a total of  60.00  from holding Footway Group AB or generate 1.45% return on investment over 90 days.

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

Footway Group AB  vs.  Aegirbio AB

Footway Group AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Footway Group AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Footway Group may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Aegirbio AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegirbio AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Footway Group and Aegirbio

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

The idea behind Footway Group AB and Aegirbio 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.