Correlation Between SEB SA and ELECTROLUX
Can any of the company-specific risk be diversified away by investing in both SEB SA and ELECTROLUX 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 SEB SA and ELECTROLUX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEB SA and ELECTROLUX B ADR2, you can compare the effects of market volatilities on SEB SA and ELECTROLUX 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 SEB SA with a short position of ELECTROLUX. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEB SA and ELECTROLUX.
Diversification Opportunities for SEB SA and ELECTROLUX
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SEB and ELECTROLUX is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SEB SA and ELECTROLUX B ADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECTROLUX B ADR2 and SEB SA 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 SEB SA are associated (or correlated) with ELECTROLUX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECTROLUX B ADR2 has no effect on the direction of SEB SA i.e., SEB SA and ELECTROLUX go up and down completely randomly.
Pair Corralation between SEB SA and ELECTROLUX
Assuming the 90 days horizon SEB SA is expected to under-perform the ELECTROLUX. But the stock apears to be less risky and, when comparing its historical volatility, SEB SA is 1.67 times less risky than ELECTROLUX. The stock trades about -0.04 of its potential returns per unit of risk. The ELECTROLUX B ADR2 is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,770 in ELECTROLUX B ADR2 on September 4, 2024 and sell it today you would lose (400.00) from holding ELECTROLUX B ADR2 or give up 22.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEB SA vs. ELECTROLUX B ADR2
Performance |
| Timeline |
| SEB SA |
| ELECTROLUX B ADR2 |
SEB SA and ELECTROLUX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEB SA and ELECTROLUX
The main advantage of trading using opposite SEB SA and ELECTROLUX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEB SA position performs unexpectedly, ELECTROLUX 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 ELECTROLUX will offset losses from the drop in ELECTROLUX's long position.| SEB SA vs. GungHo Online Entertainment | SEB SA vs. Aluminum of | SEB SA vs. Soken Chemical Engineering | SEB SA vs. KINGBOARD CHEMICAL |
| ELECTROLUX vs. SK TELECOM TDADR | ELECTROLUX vs. Ming Le Sports | ELECTROLUX vs. Transportadora de Gas | ELECTROLUX vs. Entravision Communications |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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