Correlation Between NYSE Composite and SSAB AB
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and SSAB AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and SSAB AB ADR, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of SSAB AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and SSAB AB.
Diversification Opportunities for NYSE Composite and SSAB AB
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and SSAB is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and SSAB AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSAB AB ADR and NYSE Composite 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 NYSE Composite 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 ADR has no effect on the direction of NYSE Composite i.e., NYSE Composite and SSAB AB go up and down completely randomly.
Pair Corralation between NYSE Composite and SSAB AB
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the SSAB AB. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 5.43 times less risky than SSAB AB. The index trades about -0.02 of its potential returns per unit of risk. The SSAB AB ADR is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 213.00 in SSAB AB ADR on November 28, 2024 and sell it today you would earn a total of 85.00 from holding SSAB AB ADR or generate 39.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. SSAB AB ADR
Performance |
| Timeline |
NYSE Composite and SSAB AB Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
SSAB AB ADR
Pair trading matchups for SSAB AB
Pair Trading with NYSE Composite and SSAB AB
The main advantage of trading using opposite NYSE Composite and SSAB AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Inter Parfums | NYSE Composite vs. Amkor Technology | NYSE Composite vs. Unilever PLC ADR | NYSE Composite vs. Estee Lauder Companies |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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