Correlation Between Graham and Sandvik AB
Can any of the company-specific risk be diversified away by investing in both Graham and Sandvik 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 Graham and Sandvik AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graham and Sandvik AB ADR, you can compare the effects of market volatilities on Graham and Sandvik 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 Graham with a short position of Sandvik AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham and Sandvik AB.
Diversification Opportunities for Graham and Sandvik AB
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Graham and Sandvik is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Graham and Sandvik AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandvik AB ADR and Graham 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 Graham are associated (or correlated) with Sandvik AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandvik AB ADR has no effect on the direction of Graham i.e., Graham and Sandvik AB go up and down completely randomly.
Pair Corralation between Graham and Sandvik AB
Considering the 90-day investment horizon Graham is expected to generate 2.43 times more return on investment than Sandvik AB. However, Graham is 2.43 times more volatile than Sandvik AB ADR. It trades about 0.52 of its potential returns per unit of risk. Sandvik AB ADR is currently generating about -0.12 per unit of risk. If you would invest 2,831 in Graham on September 3, 2024 and sell it today you would earn a total of 1,651 from holding Graham or generate 58.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graham vs. Sandvik AB ADR
Performance |
| Timeline |
| Graham |
| Sandvik AB ADR |
Graham and Sandvik AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graham and Sandvik AB
The main advantage of trading using opposite Graham and Sandvik AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham position performs unexpectedly, Sandvik 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 Sandvik AB will offset losses from the drop in Sandvik AB's long position.| Graham vs. Luxfer Holdings PLC | Graham vs. Enerpac Tool Group | Graham vs. Kadant Inc | Graham vs. Omega Flex |
| Sandvik AB vs. Dear Cashmere Holding | Sandvik AB vs. Goff Corp | Sandvik AB vs. Wialan Technologies | Sandvik AB vs. Cgrowth Capital |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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