Correlation Between Nolato AB and Sandvik AB
Can any of the company-specific risk be diversified away by investing in both Nolato AB 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 Nolato AB and Sandvik AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nolato AB and Sandvik AB, you can compare the effects of market volatilities on Nolato AB 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 Nolato AB with a short position of Sandvik AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nolato AB and Sandvik AB.
Diversification Opportunities for Nolato AB and Sandvik AB
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nolato and Sandvik is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nolato AB and Sandvik AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandvik AB and Nolato 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 Nolato 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 Nolato AB i.e., Nolato AB and Sandvik AB go up and down completely randomly.
Pair Corralation between Nolato AB and Sandvik AB
Assuming the 90 days trading horizon Nolato AB is expected to under-perform the Sandvik AB. In addition to that, Nolato AB is 1.53 times more volatile than Sandvik AB. It trades about 0.0 of its total potential returns per unit of risk. Sandvik AB is currently generating about 0.01 per unit of volatility. If you would invest 20,742 in Sandvik AB on October 23, 2024 and sell it today you would earn a total of 248.00 from holding Sandvik AB or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nolato AB vs. Sandvik AB
Performance |
| Timeline |
| Nolato AB |
| Sandvik AB |
Nolato AB and Sandvik AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nolato AB and Sandvik AB
The main advantage of trading using opposite Nolato AB and Sandvik AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nolato AB 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.| Nolato AB vs. HEXPOL AB | Nolato AB vs. Trelleborg AB | Nolato AB vs. Indutrade AB | Nolato AB vs. Vitrolife AB |
| Sandvik AB vs. Lindab International AB | Sandvik AB vs. Nolato AB | Sandvik AB vs. Trelleborg AB | Sandvik AB vs. BillerudKorsnas 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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