Correlation Between Getinge AB and Saab AB
Can any of the company-specific risk be diversified away by investing in both Getinge AB and Saab 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 Getinge AB and Saab AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Getinge AB ser and Saab AB, you can compare the effects of market volatilities on Getinge AB and Saab 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 Getinge AB with a short position of Saab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Getinge AB and Saab AB.
Diversification Opportunities for Getinge AB and Saab AB
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Getinge and Saab is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Getinge AB ser and Saab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saab AB and Getinge 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 Getinge AB ser are associated (or correlated) with Saab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saab AB has no effect on the direction of Getinge AB i.e., Getinge AB and Saab AB go up and down completely randomly.
Pair Corralation between Getinge AB and Saab AB
Assuming the 90 days trading horizon Getinge AB is expected to generate 2.32 times less return on investment than Saab AB. But when comparing it to its historical volatility, Getinge AB ser is 1.21 times less risky than Saab AB. It trades about 0.04 of its potential returns per unit of risk. Saab AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 17,163 in Saab AB on November 3, 2024 and sell it today you would earn a total of 6,882 from holding Saab AB or generate 40.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Getinge AB ser vs. Saab AB
Performance |
| Timeline |
| Getinge AB ser |
| Saab AB |
Getinge AB and Saab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Getinge AB and Saab AB
The main advantage of trading using opposite Getinge AB and Saab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getinge AB position performs unexpectedly, Saab 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 Saab AB will offset losses from the drop in Saab AB's long position.The idea behind Getinge AB ser and Saab AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Saab AB vs. SSAB AB | Saab AB vs. Boliden AB | Saab AB vs. Sandvik AB | Saab AB vs. Telefonaktiebolaget LM Ericsson |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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