Correlation Between Peab AB and SkiStar AB
Can any of the company-specific risk be diversified away by investing in both Peab AB and SkiStar 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 Peab AB and SkiStar AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peab AB and SkiStar AB, you can compare the effects of market volatilities on Peab AB and SkiStar 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 Peab AB with a short position of SkiStar AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peab AB and SkiStar AB.
Diversification Opportunities for Peab AB and SkiStar AB
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Peab and SkiStar is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Peab AB and SkiStar AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkiStar AB and Peab 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 Peab AB are associated (or correlated) with SkiStar AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkiStar AB has no effect on the direction of Peab AB i.e., Peab AB and SkiStar AB go up and down completely randomly.
Pair Corralation between Peab AB and SkiStar AB
Assuming the 90 days trading horizon Peab AB is expected to generate 1.26 times less return on investment than SkiStar AB. In addition to that, Peab AB is 1.19 times more volatile than SkiStar AB. It trades about 0.03 of its total potential returns per unit of risk. SkiStar AB is currently generating about 0.04 per unit of volatility. If you would invest 16,420 in SkiStar AB on October 25, 2024 and sell it today you would earn a total of 130.00 from holding SkiStar AB or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Peab AB vs. SkiStar AB
Performance |
| Timeline |
| Peab AB |
| SkiStar AB |
Peab AB and SkiStar AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peab AB and SkiStar AB
The main advantage of trading using opposite Peab AB and SkiStar AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peab AB position performs unexpectedly, SkiStar 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 SkiStar AB will offset losses from the drop in SkiStar AB's long position.| Peab AB vs. Maven Wireless Sweden | Peab AB vs. Bio Works Technologies AB | Peab AB vs. Train Alliance Sweden | Peab AB vs. Catena Media plc |
| SkiStar AB vs. Peab AB | SkiStar AB vs. Axfood AB | SkiStar AB vs. Thule Group AB | SkiStar AB vs. Avanza Bank Holding |
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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