Correlation Between ASSA ABLOY and Svenska Cellulosa
Can any of the company-specific risk be diversified away by investing in both ASSA ABLOY and Svenska Cellulosa 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 ASSA ABLOY and Svenska Cellulosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASSA ABLOY AB and Svenska Cellulosa Aktiebolaget, you can compare the effects of market volatilities on ASSA ABLOY and Svenska Cellulosa 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 ASSA ABLOY with a short position of Svenska Cellulosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASSA ABLOY and Svenska Cellulosa.
Diversification Opportunities for ASSA ABLOY and Svenska Cellulosa
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASSA and Svenska is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ASSA ABLOY AB and Svenska Cellulosa Aktiebolaget in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Cellulosa and ASSA ABLOY 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 ASSA ABLOY AB are associated (or correlated) with Svenska Cellulosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Cellulosa has no effect on the direction of ASSA ABLOY i.e., ASSA ABLOY and Svenska Cellulosa go up and down completely randomly.
Pair Corralation between ASSA ABLOY and Svenska Cellulosa
Assuming the 90 days trading horizon ASSA ABLOY AB is expected to generate 0.81 times more return on investment than Svenska Cellulosa. However, ASSA ABLOY AB is 1.24 times less risky than Svenska Cellulosa. It trades about 0.06 of its potential returns per unit of risk. Svenska Cellulosa Aktiebolaget is currently generating about 0.01 per unit of risk. If you would invest 22,815 in ASSA ABLOY AB on August 30, 2024 and sell it today you would earn a total of 9,905 from holding ASSA ABLOY AB or generate 43.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASSA ABLOY AB vs. Svenska Cellulosa Aktiebolaget
Performance |
| Timeline |
| ASSA ABLOY AB |
| Svenska Cellulosa |
ASSA ABLOY and Svenska Cellulosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASSA ABLOY and Svenska Cellulosa
The main advantage of trading using opposite ASSA ABLOY and Svenska Cellulosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASSA ABLOY position performs unexpectedly, Svenska Cellulosa 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 Svenska Cellulosa will offset losses from the drop in Svenska Cellulosa's long position.| ASSA ABLOY vs. Atlas Copco AB | ASSA ABLOY vs. Sandvik AB | ASSA ABLOY vs. Alfa Laval AB | ASSA ABLOY vs. AB SKF |
| Svenska Cellulosa vs. Essity AB | Svenska Cellulosa vs. AB SKF | Svenska Cellulosa vs. Skanska AB | Svenska Cellulosa vs. Sandvik AB |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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