Correlation Between Svenska Cellulosa and Stora Enso
Can any of the company-specific risk be diversified away by investing in both Svenska Cellulosa and Stora Enso 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 Svenska Cellulosa and Stora Enso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Svenska Cellulosa Aktiebolaget and Stora Enso Oyj, you can compare the effects of market volatilities on Svenska Cellulosa and Stora Enso 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 Svenska Cellulosa with a short position of Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Cellulosa and Stora Enso.
Diversification Opportunities for Svenska Cellulosa and Stora Enso
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Svenska and Stora is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Cellulosa Aktiebolaget and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj and Svenska Cellulosa 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 Svenska Cellulosa Aktiebolaget are associated (or correlated) with Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of Svenska Cellulosa i.e., Svenska Cellulosa and Stora Enso go up and down completely randomly.
Pair Corralation between Svenska Cellulosa and Stora Enso
Assuming the 90 days trading horizon Svenska Cellulosa Aktiebolaget is not expected to generate positive returns. However, Svenska Cellulosa Aktiebolaget is 1.12 times less risky than Stora Enso. It waists most of its returns potential to compensate for thr risk taken. Stora Enso is generating about -0.04 per unit of risk. If you would invest 14,745 in Svenska Cellulosa Aktiebolaget on September 1, 2024 and sell it today you would lose (685.00) from holding Svenska Cellulosa Aktiebolaget or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Svenska Cellulosa Aktiebolaget vs. Stora Enso Oyj
Performance |
| Timeline |
| Svenska Cellulosa |
| Stora Enso Oyj |
Svenska Cellulosa and Stora Enso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Cellulosa and Stora Enso
The main advantage of trading using opposite Svenska Cellulosa and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Cellulosa position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.| Svenska Cellulosa vs. Svenska Cellulosa Aktiebolaget | Svenska Cellulosa vs. Holmen AB | Svenska Cellulosa vs. Industrivarden AB ser | Svenska Cellulosa vs. Stora Enso Oyj |
| Stora Enso vs. Svenska Cellulosa Aktiebolaget | Stora Enso vs. Holmen AB | Stora Enso vs. AB SKF | Stora Enso vs. Trelleborg 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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