Correlation Between AB Electrolux and Svenska Cellulosa
Can any of the company-specific risk be diversified away by investing in both AB Electrolux 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 AB Electrolux and Svenska Cellulosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Electrolux and Svenska Cellulosa Aktiebolaget, you can compare the effects of market volatilities on AB Electrolux 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 AB Electrolux with a short position of Svenska Cellulosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Electrolux and Svenska Cellulosa.
Diversification Opportunities for AB Electrolux and Svenska Cellulosa
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ELUX-A and Svenska is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding AB Electrolux and Svenska Cellulosa Aktiebolaget in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Cellulosa and AB Electrolux 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 AB Electrolux 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 AB Electrolux i.e., AB Electrolux and Svenska Cellulosa go up and down completely randomly.
Pair Corralation between AB Electrolux and Svenska Cellulosa
Assuming the 90 days trading horizon AB Electrolux is expected to under-perform the Svenska Cellulosa. In addition to that, AB Electrolux is 1.39 times more volatile than Svenska Cellulosa Aktiebolaget. It trades about -0.29 of its total potential returns per unit of risk. Svenska Cellulosa Aktiebolaget is currently generating about 0.15 per unit of volatility. If you would invest 14,220 in Svenska Cellulosa Aktiebolaget on November 28, 2024 and sell it today you would earn a total of 740.00 from holding Svenska Cellulosa Aktiebolaget or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
AB Electrolux vs. Svenska Cellulosa Aktiebolaget
Performance |
| Timeline |
| AB Electrolux |
| Svenska Cellulosa |
AB Electrolux and Svenska Cellulosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Electrolux and Svenska Cellulosa
The main advantage of trading using opposite AB Electrolux and Svenska Cellulosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Electrolux 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.| AB Electrolux vs. AB Electrolux | AB Electrolux vs. Tele2 AB | AB Electrolux vs. Husqvarna AB | AB Electrolux vs. Kinnevik Investment AB |
| Svenska Cellulosa vs. Svenska Cellulosa Aktiebolaget | Svenska Cellulosa vs. Holmen AB | Svenska Cellulosa vs. Industrivarden AB ser | Svenska Cellulosa vs. Stora Enso Oyj |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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