Correlation Between AAK AB and Scibase AB
Can any of the company-specific risk be diversified away by investing in both AAK AB and Scibase AB 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 AAK AB and Scibase AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAK AB and Scibase AB, you can compare the effects of market volatilities on AAK AB and Scibase AB 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 AAK AB with a short position of Scibase AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAK AB and Scibase AB.
Diversification Opportunities for AAK AB and Scibase AB
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AAK and Scibase is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding AAK AB and Scibase AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scibase AB and AAK AB 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 AAK AB are associated (or correlated) with Scibase AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scibase AB has no effect on the direction of AAK AB i.e., AAK AB and Scibase AB go up and down completely randomly.
Pair Corralation between AAK AB and Scibase AB
Assuming the 90 days trading horizon AAK AB is expected to generate 8.75 times less return on investment than Scibase AB. But when comparing it to its historical volatility, AAK AB is 4.35 times less risky than Scibase AB. It trades about 0.03 of its potential returns per unit of risk. Scibase AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Scibase AB on September 3, 2024 and sell it today you would earn a total of 8.00 from holding Scibase AB or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAK AB vs. Scibase AB
Performance |
| Timeline |
| AAK AB |
| Scibase AB |
AAK AB and Scibase AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAK AB and Scibase AB
The main advantage of trading using opposite AAK AB and Scibase AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAK AB position performs unexpectedly, Scibase AB 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 Scibase AB will offset losses from the drop in Scibase AB's long position.The idea behind AAK AB and Scibase 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.| Scibase AB vs. Acarix AS | Scibase AB vs. Episurf Medical AB | Scibase AB vs. Xbrane Biopharma AB | Scibase AB vs. Scandinavian Enviro Systems |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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