Correlation Between AB SKF and Dometic Group
Can any of the company-specific risk be diversified away by investing in both AB SKF and Dometic 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 AB SKF and Dometic Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB SKF and Dometic Group AB, you can compare the effects of market volatilities on AB SKF and Dometic 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 AB SKF with a short position of Dometic Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB SKF and Dometic Group.
Diversification Opportunities for AB SKF and Dometic Group
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SKF-A and Dometic is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AB SKF and Dometic Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dometic Group AB and AB SKF 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 AB SKF are associated (or correlated) with Dometic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dometic Group AB has no effect on the direction of AB SKF i.e., AB SKF and Dometic Group go up and down completely randomly.
Pair Corralation between AB SKF and Dometic Group
Assuming the 90 days trading horizon AB SKF is expected to generate 0.87 times more return on investment than Dometic Group. However, AB SKF is 1.15 times less risky than Dometic Group. It trades about 0.03 of its potential returns per unit of risk. Dometic Group AB is currently generating about -0.07 per unit of risk. If you would invest 18,771 in AB SKF on August 24, 2024 and sell it today you would earn a total of 1,379 from holding AB SKF or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB SKF vs. Dometic Group AB
Performance |
| Timeline |
| AB SKF |
| Dometic Group AB |
AB SKF and Dometic Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB SKF and Dometic Group
The main advantage of trading using opposite AB SKF and Dometic Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB SKF position performs unexpectedly, Dometic 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 Dometic Group will offset losses from the drop in Dometic Group's long position.| AB SKF vs. AB SKF | AB SKF vs. Industrivarden AB ser | AB SKF vs. Trelleborg AB | AB SKF vs. Svenska Cellulosa Aktiebolaget |
| Dometic Group vs. Thule Group AB | Dometic Group vs. Husqvarna AB | Dometic Group vs. Trelleborg AB | Dometic Group vs. Essity 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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