Correlation Between Industrivarden and Stora Enso
Can any of the company-specific risk be diversified away by investing in both Industrivarden and Stora Enso 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 Industrivarden and Stora Enso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrivarden AB ser and Stora Enso Oyj, you can compare the effects of market volatilities on Industrivarden and Stora Enso 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 Industrivarden with a short position of Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrivarden and Stora Enso.
Diversification Opportunities for Industrivarden and Stora Enso
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Industrivarden and Stora is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj and Industrivarden 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 Industrivarden AB ser are associated (or correlated) with Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of Industrivarden i.e., Industrivarden and Stora Enso go up and down completely randomly.
Pair Corralation between Industrivarden and Stora Enso
Assuming the 90 days trading horizon Industrivarden AB ser is expected to generate 0.55 times more return on investment than Stora Enso. However, Industrivarden AB ser is 1.82 times less risky than Stora Enso. It trades about -0.02 of its potential returns per unit of risk. Stora Enso Oyj is currently generating about -0.15 per unit of risk. If you would invest 36,880 in Industrivarden AB ser on September 1, 2024 and sell it today you would lose (1,060) from holding Industrivarden AB ser or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Industrivarden AB ser vs. Stora Enso Oyj
Performance |
| Timeline |
| Industrivarden AB ser |
| Stora Enso Oyj |
Industrivarden and Stora Enso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrivarden and Stora Enso
The main advantage of trading using opposite Industrivarden and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrivarden position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.| Industrivarden vs. L E Lundbergfretagen | Industrivarden vs. Industrivarden AB ser | Industrivarden vs. Svenska Handelsbanken AB | Industrivarden vs. Investment AB Latour |
| Stora Enso vs. Svenska Cellulosa Aktiebolaget | Stora Enso vs. Holmen AB | Stora Enso vs. AB SKF | Stora Enso vs. Trelleborg AB |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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