Correlation Between Skanska AB and Embellence Group
Can any of the company-specific risk be diversified away by investing in both Skanska AB and Embellence 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 Skanska AB and Embellence Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skanska AB and Embellence Group AB, you can compare the effects of market volatilities on Skanska AB and Embellence 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 Skanska AB with a short position of Embellence Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skanska AB and Embellence Group.
Diversification Opportunities for Skanska AB and Embellence Group
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Skanska and Embellence is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Skanska AB and Embellence Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embellence Group and Skanska 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 Skanska AB are associated (or correlated) with Embellence Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embellence Group has no effect on the direction of Skanska AB i.e., Skanska AB and Embellence Group go up and down completely randomly.
Pair Corralation between Skanska AB and Embellence Group
Assuming the 90 days trading horizon Skanska AB is expected to generate 0.85 times more return on investment than Embellence Group. However, Skanska AB is 1.17 times less risky than Embellence Group. It trades about 0.11 of its potential returns per unit of risk. Embellence Group AB is currently generating about -0.19 per unit of risk. If you would invest 21,850 in Skanska AB on August 30, 2024 and sell it today you would earn a total of 670.00 from holding Skanska AB or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skanska AB vs. Embellence Group AB
Performance |
| Timeline |
| Skanska AB |
| Embellence Group |
Skanska AB and Embellence Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skanska AB and Embellence Group
The main advantage of trading using opposite Skanska AB and Embellence Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skanska AB position performs unexpectedly, Embellence 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 Embellence Group will offset losses from the drop in Embellence Group's long position.The idea behind Skanska AB and Embellence Group AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Embellence Group vs. AB Electrolux | Embellence Group vs. Husqvarna AB | Embellence Group vs. Essity AB | Embellence Group vs. Dometic 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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