Correlation Between Sectra AB and Vimian Group
Can any of the company-specific risk be diversified away by investing in both Sectra AB and Vimian Group 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 Sectra AB and Vimian Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sectra AB and Vimian Group AB, you can compare the effects of market volatilities on Sectra AB and Vimian Group 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 Sectra AB with a short position of Vimian Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sectra AB and Vimian Group.
Diversification Opportunities for Sectra AB and Vimian Group
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sectra and Vimian is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sectra AB and Vimian Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vimian Group AB and Sectra 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 Sectra AB are associated (or correlated) with Vimian Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vimian Group AB has no effect on the direction of Sectra AB i.e., Sectra AB and Vimian Group go up and down completely randomly.
Pair Corralation between Sectra AB and Vimian Group
Assuming the 90 days trading horizon Sectra AB is expected to generate 2.13 times less return on investment than Vimian Group. But when comparing it to its historical volatility, Sectra AB is 1.72 times less risky than Vimian Group. It trades about 0.07 of its potential returns per unit of risk. Vimian Group AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,200 in Vimian Group AB on November 3, 2024 and sell it today you would earn a total of 865.00 from holding Vimian Group AB or generate 27.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sectra AB vs. Vimian Group AB
Performance |
| Timeline |
| Sectra AB |
| Vimian Group AB |
Sectra AB and Vimian Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sectra AB and Vimian Group
The main advantage of trading using opposite Sectra AB and Vimian Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sectra AB position performs unexpectedly, Vimian Group 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 Vimian Group will offset losses from the drop in Vimian Group's long position.| Sectra AB vs. Vitrolife AB | Sectra AB vs. Beijer Ref AB | Sectra AB vs. Biotage AB | Sectra AB vs. CellaVision AB |
| Vimian Group vs. Swedencare publ AB | Vimian Group vs. Beijer Ref AB | Vimian Group vs. Troax Group AB | Vimian Group vs. Cint Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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