Correlation Between Skanska AB and Studsvik
Can any of the company-specific risk be diversified away by investing in both Skanska AB and Studsvik 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 Studsvik into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skanska AB and Studsvik AB, you can compare the effects of market volatilities on Skanska AB and Studsvik 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 Studsvik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skanska AB and Studsvik.
Diversification Opportunities for Skanska AB and Studsvik
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Skanska and Studsvik is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Skanska AB and Studsvik AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Studsvik AB 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 Studsvik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Studsvik AB has no effect on the direction of Skanska AB i.e., Skanska AB and Studsvik go up and down completely randomly.
Pair Corralation between Skanska AB and Studsvik
Assuming the 90 days trading horizon Skanska AB is expected to under-perform the Studsvik. In addition to that, Skanska AB is 1.74 times more volatile than Studsvik AB. It trades about -0.05 of its total potential returns per unit of risk. Studsvik AB is currently generating about 0.03 per unit of volatility. If you would invest 11,980 in Studsvik AB on October 10, 2024 and sell it today you would earn a total of 40.00 from holding Studsvik AB or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skanska AB vs. Studsvik AB
Performance |
| Timeline |
| Skanska AB |
| Studsvik AB |
Skanska AB and Studsvik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skanska AB and Studsvik
The main advantage of trading using opposite Skanska AB and Studsvik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skanska AB position performs unexpectedly, Studsvik 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 Studsvik will offset losses from the drop in Studsvik's long position.The idea behind Skanska AB and Studsvik 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.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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