Correlation Between National Storm and Svenska Cellulosa
Can any of the company-specific risk be diversified away by investing in both National Storm and Svenska Cellulosa 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 National Storm and Svenska Cellulosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storm Recovery and Svenska Cellulosa Aktiebolaget, you can compare the effects of market volatilities on National Storm and Svenska Cellulosa 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 National Storm with a short position of Svenska Cellulosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storm and Svenska Cellulosa.
Diversification Opportunities for National Storm and Svenska Cellulosa
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Svenska is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding National Storm Recovery and Svenska Cellulosa Aktiebolaget in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Cellulosa and National Storm 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 National Storm Recovery are associated (or correlated) with Svenska Cellulosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Cellulosa has no effect on the direction of National Storm i.e., National Storm and Svenska Cellulosa go up and down completely randomly.
Pair Corralation between National Storm and Svenska Cellulosa
Given the investment horizon of 90 days National Storm Recovery is expected to generate 12.42 times more return on investment than Svenska Cellulosa. However, National Storm is 12.42 times more volatile than Svenska Cellulosa Aktiebolaget. It trades about 0.02 of its potential returns per unit of risk. Svenska Cellulosa Aktiebolaget is currently generating about -0.09 per unit of risk. If you would invest 81.00 in National Storm Recovery on August 28, 2024 and sell it today you would lose (43.00) from holding National Storm Recovery or give up 53.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
National Storm Recovery vs. Svenska Cellulosa Aktiebolaget
Performance |
| Timeline |
| National Storm Recovery |
| Svenska Cellulosa |
National Storm and Svenska Cellulosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storm and Svenska Cellulosa
The main advantage of trading using opposite National Storm and Svenska Cellulosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storm position performs unexpectedly, Svenska Cellulosa 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 Svenska Cellulosa will offset losses from the drop in Svenska Cellulosa's long position.| National Storm vs. Interfor | National Storm vs. Western Forest Products | National Storm vs. Stella Jones | National Storm vs. Simpson Manufacturing |
| Svenska Cellulosa vs. Interfor | Svenska Cellulosa vs. Western Forest Products | Svenska Cellulosa vs. Stella Jones | Svenska Cellulosa vs. Simpson Manufacturing |
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 CEOs Directory module to screen CEOs from public companies around the world.
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