Correlation Between Central Asia and SEB SA
Can any of the company-specific risk be diversified away by investing in both Central Asia 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 Central Asia and SEB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Asia Metals and SEB SA, you can compare the effects of market volatilities on Central Asia 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 Central Asia with a short position of SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and SEB SA.
Diversification Opportunities for Central Asia and SEB SA
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and SEB is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA and Central Asia 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 Central Asia Metals 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 Central Asia i.e., Central Asia and SEB SA go up and down completely randomly.
Pair Corralation between Central Asia and SEB SA
Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the SEB SA. But the stock apears to be less risky and, when comparing its historical volatility, Central Asia Metals is 1.05 times less risky than SEB SA. The stock trades about -0.06 of its potential returns per unit of risk. The SEB SA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 10,349 in SEB SA on September 15, 2024 and sell it today you would lose (1,114) from holding SEB SA or give up 10.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Asia Metals vs. SEB SA
Performance |
| Timeline |
| Central Asia Metals |
| SEB SA |
Central Asia and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and SEB SA
The main advantage of trading using opposite Central Asia and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia 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.| Central Asia vs. Givaudan SA | Central Asia vs. Antofagasta PLC | Central Asia vs. Ferrexpo PLC | Central Asia vs. Atalaya Mining |
| SEB SA vs. Metals Exploration Plc | SEB SA vs. Central Asia Metals | SEB SA vs. AMG Advanced Metallurgical | SEB SA vs. United Airlines Holdings |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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