Correlation Between Axfood AB and Svenska Cellulosa
Can any of the company-specific risk be diversified away by investing in both Axfood AB 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 Axfood AB and Svenska Cellulosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and Svenska Cellulosa Aktiebolaget, you can compare the effects of market volatilities on Axfood AB 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 Axfood AB with a short position of Svenska Cellulosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and Svenska Cellulosa.
Diversification Opportunities for Axfood AB and Svenska Cellulosa
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Axfood and Svenska is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Axfood 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 Axfood 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 Axfood 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 Axfood AB i.e., Axfood AB and Svenska Cellulosa go up and down completely randomly.
Pair Corralation between Axfood AB and Svenska Cellulosa
Assuming the 90 days trading horizon Axfood AB is expected to under-perform the Svenska Cellulosa. But the stock apears to be less risky and, when comparing its historical volatility, Axfood AB is 1.07 times less risky than Svenska Cellulosa. The stock trades about -0.04 of its potential returns per unit of risk. The Svenska Cellulosa Aktiebolaget is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 13,984 in Svenska Cellulosa Aktiebolaget on November 3, 2024 and sell it today you would earn a total of 1,296 from holding Svenska Cellulosa Aktiebolaget or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axfood AB vs. Svenska Cellulosa Aktiebolaget
Performance |
| Timeline |
| Axfood AB |
| Svenska Cellulosa |
Axfood AB and Svenska Cellulosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and Svenska Cellulosa
The main advantage of trading using opposite Axfood AB and Svenska Cellulosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB 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.| Axfood AB vs. Castellum AB | Axfood AB vs. Tele2 AB | Axfood AB vs. Investor AB ser | Axfood AB vs. Kinnevik Investment AB |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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