Correlation Between Malmbergs Elektriska and Dedicare

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

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

Diversification Opportunities for Malmbergs Elektriska and Dedicare

-0.14

Correlation Coefficient

Malmbergs Elektriska  Dedicare

Good diversification

The 3 months correlation between Malmbergs and Dedicare is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Malmbergs Elektriska AB and Dedicare AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dedicare AB and Malmbergs Elektriska 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 Malmbergs Elektriska AB are associated (or correlated) with Dedicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dedicare AB has no effect on the direction of Malmbergs Elektriska i.e., Malmbergs Elektriska and Dedicare go up and down completely randomly.

Pair Corralation between Malmbergs Elektriska and Dedicare

Assuming the 90 days trading horizon Malmbergs Elektriska is expected to generate 2.74 times less return on investment than Dedicare. In addition to that, Malmbergs Elektriska is 1.42 times more volatile than Dedicare AB. It trades about 0.01 of its total potential returns per unit of risk. Dedicare AB is currently generating about 0.05 per unit of volatility. If you would invest  4,177  in Dedicare AB on April 25, 2025 and sell it today you would earn a total of  168.00  from holding Dedicare AB or generate 4.02% return on investment over 90 days.

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

Malmbergs Elektriska AB  vs.  Dedicare AB

Malmbergs Elektriska

Risk-Adjusted Performance

Very Weak

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

Dedicare AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dedicare AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Dedicare is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Malmbergs Elektriska and Dedicare

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

The idea behind Malmbergs Elektriska AB and Dedicare 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.