Correlation Between Rottneros and Embellence Group

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

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

Diversification Opportunities for Rottneros and Embellence Group

-0.25

Correlation Coefficient

Rottneros  Embellence Group

Very good diversification

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

Pair Corralation between Rottneros and Embellence Group

Assuming the 90 days trading horizon Rottneros is expected to generate 3.51 times less return on investment than Embellence Group. In addition to that, Rottneros is 1.14 times more volatile than Embellence Group AB. It trades about 0.06 of its total potential returns per unit of risk. Embellence Group AB is currently generating about 0.24 per unit of volatility. If you would invest  3,450  in Embellence Group AB on April 23, 2025 and sell it today you would earn a total of  300.00  from holding Embellence Group AB or generate 8.7% return on investment over 90 days.

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

Rottneros AB  vs.  Embellence Group AB

Rottneros AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rottneros 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 August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Embellence Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Embellence Group AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Embellence Group may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Rottneros and Embellence Group

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

The idea behind Rottneros AB and Embellence Group 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.