Correlation Between Lindab International and Sandvik AB
Can any of the company-specific risk be diversified away by investing in both Lindab International 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 Lindab International and Sandvik AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindab International AB and Sandvik AB, you can compare the effects of market volatilities on Lindab International 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 Lindab International with a short position of Sandvik AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindab International and Sandvik AB.
Diversification Opportunities for Lindab International and Sandvik AB
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lindab and Sandvik is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lindab International AB and Sandvik AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandvik AB and Lindab International 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 Lindab International AB 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 has no effect on the direction of Lindab International i.e., Lindab International and Sandvik AB go up and down completely randomly.
Pair Corralation between Lindab International and Sandvik AB
Assuming the 90 days trading horizon Lindab International AB is expected to under-perform the Sandvik AB. In addition to that, Lindab International is 1.38 times more volatile than Sandvik AB. It trades about -0.15 of its total potential returns per unit of risk. Sandvik AB is currently generating about 0.14 per unit of volatility. If you would invest 20,950 in Sandvik AB on November 3, 2024 and sell it today you would earn a total of 2,050 from holding Sandvik AB or generate 9.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindab International AB vs. Sandvik AB
Performance |
| Timeline |
| Lindab International |
| Sandvik AB |
Lindab International and Sandvik AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindab International and Sandvik AB
The main advantage of trading using opposite Lindab International and Sandvik AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindab International 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.| Lindab International vs. Inwido AB | Lindab International vs. Nolato AB | Lindab International vs. Trelleborg AB | Lindab International vs. Peab AB |
| Sandvik AB vs. AB SKF | Sandvik AB vs. Alfa Laval AB | Sandvik AB vs. Atlas Copco AB | Sandvik AB vs. Boliden 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 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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