Correlation Between Holmen AB and Suzano SA
Can any of the company-specific risk be diversified away by investing in both Holmen AB and Suzano SA 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 Holmen AB and Suzano SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB and Suzano SA, you can compare the effects of market volatilities on Holmen AB and Suzano SA 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 Holmen AB with a short position of Suzano SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and Suzano SA.
Diversification Opportunities for Holmen AB and Suzano SA
Excellent diversification
The 3 months correlation between Holmen and Suzano is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB and Suzano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzano SA and Holmen 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 Holmen AB are associated (or correlated) with Suzano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzano SA has no effect on the direction of Holmen AB i.e., Holmen AB and Suzano SA go up and down completely randomly.
Pair Corralation between Holmen AB and Suzano SA
Assuming the 90 days trading horizon Holmen AB is expected to under-perform the Suzano SA. But the stock apears to be less risky and, when comparing its historical volatility, Holmen AB is 1.27 times less risky than Suzano SA. The stock trades about -0.23 of its potential returns per unit of risk. The Suzano SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 950.00 in Suzano SA on August 30, 2024 and sell it today you would lose (10.00) from holding Suzano SA or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holmen AB vs. Suzano SA
Performance |
| Timeline |
| Holmen AB |
| Suzano SA |
Holmen AB and Suzano SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and Suzano SA
The main advantage of trading using opposite Holmen AB and Suzano SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB position performs unexpectedly, Suzano SA 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 Suzano SA will offset losses from the drop in Suzano SA's long position.| Holmen AB vs. Nine Dragons Paper | Holmen AB vs. Superior Plus Corp | Holmen AB vs. Origin Agritech | Holmen AB vs. Identiv |
| Suzano SA vs. Nine Dragons Paper | Suzano SA vs. Superior Plus Corp | Suzano SA vs. Origin Agritech | Suzano SA vs. Identiv |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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