Correlation Between Sandvik AB and Graham
Can any of the company-specific risk be diversified away by investing in both Sandvik AB and Graham 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 Sandvik AB and Graham into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandvik AB ADR and Graham, you can compare the effects of market volatilities on Sandvik AB and Graham 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 Sandvik AB with a short position of Graham. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandvik AB and Graham.
Diversification Opportunities for Sandvik AB and Graham
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sandvik and Graham is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sandvik AB ADR and Graham in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graham and Sandvik AB 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 Sandvik AB ADR are associated (or correlated) with Graham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graham has no effect on the direction of Sandvik AB i.e., Sandvik AB and Graham go up and down completely randomly.
Pair Corralation between Sandvik AB and Graham
Assuming the 90 days horizon Sandvik AB ADR is expected to under-perform the Graham. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sandvik AB ADR is 1.94 times less risky than Graham. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Graham is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,797 in Graham on September 3, 2024 and sell it today you would earn a total of 2,685 from holding Graham or generate 149.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandvik AB ADR vs. Graham
Performance |
| Timeline |
| Sandvik AB ADR |
| Graham |
Sandvik AB and Graham Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandvik AB and Graham
The main advantage of trading using opposite Sandvik AB and Graham positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandvik AB position performs unexpectedly, Graham 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 Graham will offset losses from the drop in Graham's long position.| Sandvik AB vs. Dear Cashmere Holding | Sandvik AB vs. Goff Corp | Sandvik AB vs. Wialan Technologies | Sandvik AB vs. Cgrowth Capital |
| Graham vs. Luxfer Holdings PLC | Graham vs. Enerpac Tool Group | Graham vs. Kadant Inc | Graham vs. Omega Flex |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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