Correlation Between SBB-B and Enad Global
Can any of the company-specific risk be diversified away by investing in both SBB-B and Enad Global 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 SBB-B and Enad Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samhllsbyggnadsbolaget i Norden and Enad Global 7, you can compare the effects of market volatilities on SBB-B and Enad Global 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 SBB-B with a short position of Enad Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBB-B and Enad Global.
Diversification Opportunities for SBB-B and Enad Global
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between SBB-B and Enad is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Samhllsbyggnadsbolaget i Norde and Enad Global 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enad Global 7 and SBB-B 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 Samhllsbyggnadsbolaget i Norden are associated (or correlated) with Enad Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enad Global 7 has no effect on the direction of SBB-B i.e., SBB-B and Enad Global go up and down completely randomly.
Pair Corralation between SBB-B and Enad Global
Assuming the 90 days trading horizon SBB-B is expected to generate 3.16 times less return on investment than Enad Global. In addition to that, SBB-B is 2.53 times more volatile than Enad Global 7. It trades about 0.03 of its total potential returns per unit of risk. Enad Global 7 is currently generating about 0.27 per unit of volatility. If you would invest 1,398 in Enad Global 7 on September 24, 2024 and sell it today you would earn a total of 224.00 from holding Enad Global 7 or generate 16.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samhllsbyggnadsbolaget i Norde vs. Enad Global 7
Performance |
| Timeline |
| Samhllsbyggnadsbolaget |
| Enad Global 7 |
SBB-B and Enad Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBB-B and Enad Global
The main advantage of trading using opposite SBB-B and Enad Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBB-B position performs unexpectedly, Enad Global 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 Enad Global will offset losses from the drop in Enad Global's long position.The idea behind Samhllsbyggnadsbolaget i Norden and Enad Global 7 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Enad Global vs. Samhllsbyggnadsbolaget i Norden | Enad Global vs. Sinch AB | Enad Global vs. Zaptec AS | Enad Global vs. Evolution 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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