Correlation Between Nederman Holding and AB SKF
Can any of the company-specific risk be diversified away by investing in both Nederman Holding and AB SKF 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 Nederman Holding and AB SKF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nederman Holding AB and AB SKF, you can compare the effects of market volatilities on Nederman Holding and AB SKF 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 Nederman Holding with a short position of AB SKF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nederman Holding and AB SKF.
Diversification Opportunities for Nederman Holding and AB SKF
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nederman and SKF-B is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nederman Holding AB and AB SKF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB SKF and Nederman Holding 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 Nederman Holding AB are associated (or correlated) with AB SKF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB SKF has no effect on the direction of Nederman Holding i.e., Nederman Holding and AB SKF go up and down completely randomly.
Pair Corralation between Nederman Holding and AB SKF
Assuming the 90 days trading horizon Nederman Holding AB is expected to generate 1.25 times more return on investment than AB SKF. However, Nederman Holding is 1.25 times more volatile than AB SKF. It trades about 0.0 of its potential returns per unit of risk. AB SKF is currently generating about -0.02 per unit of risk. If you would invest 22,750 in Nederman Holding AB on September 5, 2024 and sell it today you would lose (900.00) from holding Nederman Holding AB or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Nederman Holding AB vs. AB SKF
Performance |
| Timeline |
| Nederman Holding |
| AB SKF |
Nederman Holding and AB SKF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nederman Holding and AB SKF
The main advantage of trading using opposite Nederman Holding and AB SKF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nederman Holding position performs unexpectedly, AB SKF 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 AB SKF will offset losses from the drop in AB SKF's long position.| Nederman Holding vs. AB SKF | Nederman Holding vs. ASSA ABLOY AB | Nederman Holding vs. Atlas Copco AB | Nederman Holding 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |