Correlation Between Investment and ChargePanel

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

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

Diversification Opportunities for Investment and ChargePanel

0.82

Correlation Coefficient

Investment  ChargePanel

Very poor diversification

The 3 months correlation between Investment and ChargePanel is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Oresund and ChargePanel AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChargePanel AB and Investment 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 Investment AB Oresund are associated (or correlated) with ChargePanel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChargePanel AB has no effect on the direction of Investment i.e., Investment and ChargePanel go up and down completely randomly.

Pair Corralation between Investment and ChargePanel

Assuming the 90 days trading horizon Investment is expected to generate 4.96 times less return on investment than ChargePanel. But when comparing it to its historical volatility, Investment AB Oresund is 4.41 times less risky than ChargePanel. It trades about 0.22 of its potential returns per unit of risk. ChargePanel AB is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  119.00  in ChargePanel AB on April 24, 2025 and sell it today you would earn a total of  131.00  from holding ChargePanel AB or generate 110.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Investment AB Oresund  vs.  ChargePanel AB

Investment AB Oresund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Investment AB Oresund are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

ChargePanel AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ChargePanel AB are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, ChargePanel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Investment and ChargePanel

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

The idea behind Investment AB Oresund and ChargePanel 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.