Correlation Between Rottneros and Sweco AB
Can any of the company-specific risk be diversified away by investing in both Rottneros and Sweco 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 Rottneros and Sweco AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rottneros AB and Sweco AB, you can compare the effects of market volatilities on Rottneros and Sweco 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 Rottneros with a short position of Sweco AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rottneros and Sweco AB.
Diversification Opportunities for Rottneros and Sweco AB
Average diversification
The 3 months correlation between Rottneros and Sweco is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Rottneros AB and Sweco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweco AB and Rottneros 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 Rottneros AB are associated (or correlated) with Sweco AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweco AB has no effect on the direction of Rottneros i.e., Rottneros and Sweco AB go up and down completely randomly.
Pair Corralation between Rottneros and Sweco AB
Assuming the 90 days trading horizon Rottneros AB is expected to generate 0.92 times more return on investment than Sweco AB. However, Rottneros AB is 1.08 times less risky than Sweco AB. It trades about -0.1 of its potential returns per unit of risk. Sweco AB is currently generating about -0.11 per unit of risk. If you would invest 988.00 in Rottneros AB on August 29, 2024 and sell it today you would lose (55.00) from holding Rottneros AB or give up 5.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rottneros AB vs. Sweco AB
Performance |
| Timeline |
| Rottneros AB |
| Sweco AB |
Rottneros and Sweco AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rottneros and Sweco AB
The main advantage of trading using opposite Rottneros and Sweco AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rottneros position performs unexpectedly, Sweco 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 Sweco AB will offset losses from the drop in Sweco AB's long position.| Rottneros vs. Bjorn Borg AB | Rottneros vs. Diadrom Holding AB | Rottneros vs. Anoto Group AB | Rottneros vs. Cloetta AB |
| Sweco AB vs. Indutrade AB | Sweco AB vs. Beijer Ref AB | Sweco AB vs. Addtech AB | Sweco AB vs. NIBE Industrier 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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