Correlation Between VOLVO B and Evolution

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

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

Diversification Opportunities for VOLVO B and Evolution

-0.47

Correlation Coefficient

VOLVO B  Evolution

Very good diversification

The 3 months correlation between VOLVO and Evolution is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding VOLVO B UNSPADR and Evolution AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution AB and VOLVO B 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 VOLVO B UNSPADR are associated (or correlated) with Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution AB has no effect on the direction of VOLVO B i.e., VOLVO B and Evolution go up and down completely randomly.

Pair Corralation between VOLVO B and Evolution

Assuming the 90 days trading horizon VOLVO B is expected to generate 2.88 times less return on investment than Evolution. But when comparing it to its historical volatility, VOLVO B UNSPADR is 1.61 times less risky than Evolution. It trades about 0.02 of its potential returns per unit of risk. Evolution AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,029  in Evolution AB on April 22, 2025 and sell it today you would earn a total of  377.00  from holding Evolution AB or generate 5.36% return on investment over 90 days.

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

VOLVO B UNSPADR  vs.  Evolution AB

VOLVO B UNSPADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VOLVO B UNSPADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, VOLVO B is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Evolution AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Evolution may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with VOLVO B and Evolution

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

The idea behind VOLVO B UNSPADR and Evolution 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.