Correlation Between Scandinavian Brake and Matas AS
Can any of the company-specific risk be diversified away by investing in both Scandinavian Brake and Matas AS 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 Scandinavian Brake and Matas AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Brake Systems and Matas AS, you can compare the effects of market volatilities on Scandinavian Brake and Matas AS 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 Scandinavian Brake with a short position of Matas AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Brake and Matas AS.
Diversification Opportunities for Scandinavian Brake and Matas AS
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scandinavian and Matas is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Brake Systems and Matas AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matas AS and Scandinavian Brake 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 Scandinavian Brake Systems are associated (or correlated) with Matas AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matas AS has no effect on the direction of Scandinavian Brake i.e., Scandinavian Brake and Matas AS go up and down completely randomly.
Pair Corralation between Scandinavian Brake and Matas AS
Assuming the 90 days trading horizon Scandinavian Brake Systems is expected to generate 0.37 times more return on investment than Matas AS. However, Scandinavian Brake Systems is 2.7 times less risky than Matas AS. It trades about 0.03 of its potential returns per unit of risk. Matas AS is currently generating about 0.01 per unit of risk. If you would invest 1,170 in Scandinavian Brake Systems on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Scandinavian Brake Systems or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Scandinavian Brake Systems vs. Matas AS
Performance |
| Timeline |
| Scandinavian Brake |
| Matas AS |
Scandinavian Brake and Matas AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Brake and Matas AS
The main advantage of trading using opposite Scandinavian Brake and Matas AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Brake position performs unexpectedly, Matas AS 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 Matas AS will offset losses from the drop in Matas AS's long position.| Scandinavian Brake vs. SKAKO AS | Scandinavian Brake vs. Newcap Holding AS | Scandinavian Brake vs. Columbus AS | Scandinavian Brake vs. Rovsing AS |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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