Correlation Between Svenska Cellulosa and SSAB AB
Can any of the company-specific risk be diversified away by investing in both Svenska Cellulosa and SSAB AB 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 SSAB AB 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 SSAB AB, you can compare the effects of market volatilities on Svenska Cellulosa and SSAB AB 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 SSAB AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Cellulosa and SSAB AB.
Diversification Opportunities for Svenska Cellulosa and SSAB AB
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Svenska and SSAB is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Cellulosa Aktiebolaget and SSAB AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSAB 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 SSAB AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSAB AB has no effect on the direction of Svenska Cellulosa i.e., Svenska Cellulosa and SSAB AB go up and down completely randomly.
Pair Corralation between Svenska Cellulosa and SSAB AB
Assuming the 90 days trading horizon Svenska Cellulosa is expected to generate 7.71 times less return on investment than SSAB AB. But when comparing it to its historical volatility, Svenska Cellulosa Aktiebolaget is 1.66 times less risky than SSAB AB. It trades about 0.1 of its potential returns per unit of risk. SSAB AB is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 4,391 in SSAB AB on November 30, 2024 and sell it today you would earn a total of 2,067 from holding SSAB AB or generate 47.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Cellulosa Aktiebolaget vs. SSAB AB
Performance |
| Timeline |
| Svenska Cellulosa |
| SSAB AB |
Svenska Cellulosa and SSAB AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Cellulosa and SSAB AB
The main advantage of trading using opposite Svenska Cellulosa and SSAB AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Cellulosa position performs unexpectedly, SSAB AB 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 SSAB AB will offset losses from the drop in SSAB AB's long position.| Svenska Cellulosa vs. Essity AB | Svenska Cellulosa vs. AB SKF | Svenska Cellulosa vs. Skanska AB | Svenska Cellulosa vs. Sandvik AB |
| SSAB AB vs. Boliden AB | SSAB AB vs. SSAB AB | SSAB AB vs. Tele2 AB | SSAB AB vs. Samhllsbyggnadsbolaget i Norden |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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