Correlation Between Bravida Holding and Sweco AB
Can any of the company-specific risk be diversified away by investing in both Bravida Holding and Sweco 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 Bravida Holding and Sweco AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bravida Holding AB and Sweco AB, you can compare the effects of market volatilities on Bravida Holding and Sweco 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 Bravida Holding with a short position of Sweco AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bravida Holding and Sweco AB.
Diversification Opportunities for Bravida Holding and Sweco AB
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bravida and Sweco is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bravida Holding AB and Sweco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweco AB and Bravida Holding 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 Bravida Holding AB are associated (or correlated) with Sweco AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweco AB has no effect on the direction of Bravida Holding i.e., Bravida Holding and Sweco AB go up and down completely randomly.
Pair Corralation between Bravida Holding and Sweco AB
Assuming the 90 days trading horizon Bravida Holding AB is expected to under-perform the Sweco AB. But the stock apears to be less risky and, when comparing its historical volatility, Bravida Holding AB is 1.15 times less risky than Sweco AB. The stock trades about -0.01 of its potential returns per unit of risk. The Sweco AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,921 in Sweco AB on September 3, 2024 and sell it today you would earn a total of 6,379 from holding Sweco AB or generate 64.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bravida Holding AB vs. Sweco AB
Performance |
| Timeline |
| Bravida Holding AB |
| Sweco AB |
Bravida Holding and Sweco AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bravida Holding and Sweco AB
The main advantage of trading using opposite Bravida Holding and Sweco AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bravida Holding position performs unexpectedly, Sweco 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 Sweco AB will offset losses from the drop in Sweco AB's long position.| Bravida Holding vs. Sandvik AB | Bravida Holding vs. AB SKF | Bravida Holding vs. ASSA ABLOY AB | Bravida Holding vs. Atlas Copco 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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