Correlation Between Park Ohio and Sandvik AB
Can any of the company-specific risk be diversified away by investing in both Park Ohio 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 Park Ohio and Sandvik AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Ohio Holdings and Sandvik AB ADR, you can compare the effects of market volatilities on Park Ohio 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 Park Ohio with a short position of Sandvik AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Sandvik AB.
Diversification Opportunities for Park Ohio and Sandvik AB
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Park and Sandvik is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Sandvik AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandvik AB ADR and Park Ohio 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 Park Ohio Holdings 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 ADR has no effect on the direction of Park Ohio i.e., Park Ohio and Sandvik AB go up and down completely randomly.
Pair Corralation between Park Ohio and Sandvik AB
Given the investment horizon of 90 days Park Ohio Holdings is expected to generate 1.99 times more return on investment than Sandvik AB. However, Park Ohio is 1.99 times more volatile than Sandvik AB ADR. It trades about 0.18 of its potential returns per unit of risk. Sandvik AB ADR is currently generating about -0.12 per unit of risk. If you would invest 2,838 in Park Ohio Holdings on September 3, 2024 and sell it today you would earn a total of 379.00 from holding Park Ohio Holdings or generate 13.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Ohio Holdings vs. Sandvik AB ADR
Performance |
| Timeline |
| Park Ohio Holdings |
| Sandvik AB ADR |
Park Ohio and Sandvik AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Ohio and Sandvik AB
The main advantage of trading using opposite Park Ohio and Sandvik AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio 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.| Park Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
| Sandvik AB vs. Dear Cashmere Holding | Sandvik AB vs. Goff Corp | Sandvik AB vs. Wialan Technologies | Sandvik AB vs. Cgrowth Capital |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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