Correlation Between Essity AB and Svenska Cellulosa
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By analyzing existing cross correlation between Essity AB and Svenska Cellulosa Aktiebolaget, you can compare the effects of market volatilities on Essity 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 Essity AB with a short position of Svenska Cellulosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essity AB and Svenska Cellulosa.
Diversification Opportunities for Essity AB and Svenska Cellulosa
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Essity and Svenska is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Essity 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 Essity 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 Essity 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 Essity AB i.e., Essity AB and Svenska Cellulosa go up and down completely randomly.
Pair Corralation between Essity AB and Svenska Cellulosa
Assuming the 90 days trading horizon Essity AB is expected to generate 3.02 times less return on investment than Svenska Cellulosa. But when comparing it to its historical volatility, Essity AB is 1.63 times less risky than Svenska Cellulosa. It trades about 0.13 of its potential returns per unit of risk. Svenska Cellulosa Aktiebolaget is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 13,545 in Svenska Cellulosa Aktiebolaget on October 23, 2024 and sell it today you would earn a total of 665.00 from holding Svenska Cellulosa Aktiebolaget or generate 4.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essity AB vs. Svenska Cellulosa Aktiebolaget
Performance |
| Timeline |
| Essity AB |
| Svenska Cellulosa |
Essity AB and Svenska Cellulosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essity AB and Svenska Cellulosa
The main advantage of trading using opposite Essity AB and Svenska Cellulosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essity 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.| Essity AB vs. Svenska Cellulosa Aktiebolaget | Essity AB vs. ASSA ABLOY AB | Essity AB vs. AB Electrolux | Essity AB 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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