Correlation Between Svenska Cellulosa and Rottneros
Can any of the company-specific risk be diversified away by investing in both Svenska Cellulosa and Rottneros 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 Rottneros 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 Rottneros AB, you can compare the effects of market volatilities on Svenska Cellulosa and Rottneros 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 Rottneros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Cellulosa and Rottneros.
Diversification Opportunities for Svenska Cellulosa and Rottneros
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Svenska and Rottneros is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Cellulosa Aktiebolaget and Rottneros AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rottneros AB 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 Rottneros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rottneros AB has no effect on the direction of Svenska Cellulosa i.e., Svenska Cellulosa and Rottneros go up and down completely randomly.
Pair Corralation between Svenska Cellulosa and Rottneros
Assuming the 90 days trading horizon Svenska Cellulosa Aktiebolaget is expected to generate 0.93 times more return on investment than Rottneros. However, Svenska Cellulosa Aktiebolaget is 1.08 times less risky than Rottneros. It trades about 0.3 of its potential returns per unit of risk. Rottneros AB is currently generating about 0.13 per unit of risk. If you would invest 14,110 in Svenska Cellulosa Aktiebolaget on November 5, 2024 and sell it today you would earn a total of 1,170 from holding Svenska Cellulosa Aktiebolaget or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Cellulosa Aktiebolaget vs. Rottneros AB
Performance |
| Timeline |
| Svenska Cellulosa |
| Rottneros AB |
Svenska Cellulosa and Rottneros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Cellulosa and Rottneros
The main advantage of trading using opposite Svenska Cellulosa and Rottneros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Cellulosa position performs unexpectedly, Rottneros 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 Rottneros will offset losses from the drop in Rottneros' long position.| Svenska Cellulosa vs. Essity AB | Svenska Cellulosa vs. AB SKF | Svenska Cellulosa vs. Skanska AB | Svenska Cellulosa vs. Sandvik AB |
| Rottneros vs. BillerudKorsnas AB | Rottneros vs. SSAB AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Axfood 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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