Correlation Between Aluminumof China and SEB SA
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and SEB SA 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 Aluminumof China and SEB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and SEB SA, you can compare the effects of market volatilities on Aluminumof China and SEB SA 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 Aluminumof China with a short position of SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and SEB SA.
Diversification Opportunities for Aluminumof China and SEB SA
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aluminumof and SEB is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA and Aluminumof China 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 Aluminum of are associated (or correlated) with SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Aluminumof China i.e., Aluminumof China and SEB SA go up and down completely randomly.
Pair Corralation between Aluminumof China and SEB SA
Assuming the 90 days horizon Aluminum of is expected to generate 2.39 times more return on investment than SEB SA. However, Aluminumof China is 2.39 times more volatile than SEB SA. It trades about 0.12 of its potential returns per unit of risk. SEB SA is currently generating about 0.04 per unit of risk. If you would invest 43.00 in Aluminum of on September 12, 2024 and sell it today you would earn a total of 14.00 from holding Aluminum of or generate 32.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. SEB SA
Performance |
| Timeline |
| Aluminumof China |
| SEB SA |
Aluminumof China and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and SEB SA
The main advantage of trading using opposite Aluminumof China and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.| Aluminumof China vs. Norsk Hydro ASA | Aluminumof China vs. Kaiser Aluminum | Aluminumof China vs. Superior Plus Corp | Aluminumof China vs. SIVERS SEMICONDUCTORS AB |
| SEB SA vs. Suntory Beverage Food | SEB SA vs. ScanSource | SEB SA vs. YOOMA WELLNESS INC | SEB SA vs. Natural Health Trends |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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