Correlation Between Holmen AB and SSAB AB
Can any of the company-specific risk be diversified away by investing in both Holmen AB and SSAB 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 Holmen AB and SSAB AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB and SSAB AB, you can compare the effects of market volatilities on Holmen AB and SSAB 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 Holmen AB with a short position of SSAB AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and SSAB AB.
Diversification Opportunities for Holmen AB and SSAB AB
Significant diversification
The 3 months correlation between Holmen and SSAB is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB and SSAB AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSAB AB 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 SSAB AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSAB AB has no effect on the direction of Holmen AB i.e., Holmen AB and SSAB AB go up and down completely randomly.
Pair Corralation between Holmen AB and SSAB AB
Assuming the 90 days trading horizon Holmen AB is expected to generate 0.48 times more return on investment than SSAB AB. However, Holmen AB is 2.1 times less risky than SSAB AB. It trades about -0.04 of its potential returns per unit of risk. SSAB AB is currently generating about -0.04 per unit of risk. If you would invest 42,300 in Holmen AB on September 4, 2024 and sell it today you would lose (420.00) from holding Holmen AB or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holmen AB vs. SSAB AB
Performance |
| Timeline |
| Holmen AB |
| SSAB AB |
Holmen AB and SSAB AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and SSAB AB
The main advantage of trading using opposite Holmen AB and SSAB AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB position performs unexpectedly, SSAB 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 SSAB AB will offset losses from the drop in SSAB AB's long position.| Holmen AB vs. Svenska Cellulosa Aktiebolaget | Holmen AB vs. BillerudKorsnas AB | Holmen AB vs. Boliden AB | Holmen AB vs. Husqvarna AB |
| SSAB AB vs. Boliden AB | SSAB AB vs. SSAB AB | SSAB AB vs. Tele2 AB | SSAB AB vs. Samhllsbyggnadsbolaget i Norden |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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