Correlation Between Saab AB and Swedish Orphan
Can any of the company-specific risk be diversified away by investing in both Saab AB and Swedish Orphan 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 Saab AB and Swedish Orphan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saab AB and Swedish Orphan Biovitrum, you can compare the effects of market volatilities on Saab AB and Swedish Orphan 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 Saab AB with a short position of Swedish Orphan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saab AB and Swedish Orphan.
Diversification Opportunities for Saab AB and Swedish Orphan
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Saab and Swedish is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Saab AB and Swedish Orphan Biovitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Orphan Biovitrum and Saab 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 Saab AB are associated (or correlated) with Swedish Orphan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Orphan Biovitrum has no effect on the direction of Saab AB i.e., Saab AB and Swedish Orphan go up and down completely randomly.
Pair Corralation between Saab AB and Swedish Orphan
Assuming the 90 days trading horizon Saab AB is expected to under-perform the Swedish Orphan. In addition to that, Saab AB is 1.24 times more volatile than Swedish Orphan Biovitrum. It trades about -0.01 of its total potential returns per unit of risk. Swedish Orphan Biovitrum is currently generating about 0.03 per unit of volatility. If you would invest 28,300 in Swedish Orphan Biovitrum on September 1, 2024 and sell it today you would earn a total of 1,940 from holding Swedish Orphan Biovitrum or generate 6.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saab AB vs. Swedish Orphan Biovitrum
Performance |
| Timeline |
| Saab AB |
| Swedish Orphan Biovitrum |
Saab AB and Swedish Orphan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saab AB and Swedish Orphan
The main advantage of trading using opposite Saab AB and Swedish Orphan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saab AB position performs unexpectedly, Swedish Orphan 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 Swedish Orphan will offset losses from the drop in Swedish Orphan's long position.| Saab AB vs. SSAB AB | Saab AB vs. Boliden AB | Saab AB vs. Sandvik AB | Saab AB vs. Telefonaktiebolaget LM Ericsson |
| Swedish Orphan vs. Kancera AB | Swedish Orphan vs. Cyxone AB | Swedish Orphan vs. Lidds AB | Swedish Orphan vs. Cantargia 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 Stocks Directory module to find actively traded stocks across global markets.
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