Correlation Between AB SKF and Essity AB
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By analyzing existing cross correlation between AB SKF and Essity AB, you can compare the effects of market volatilities on AB SKF and Essity AB 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 Essity AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB SKF and Essity AB.
Diversification Opportunities for AB SKF and Essity AB
Very good diversification
The 3 months correlation between SKF-B and Essity is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding AB SKF and Essity AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essity 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 Essity AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essity AB has no effect on the direction of AB SKF i.e., AB SKF and Essity AB go up and down completely randomly.
Pair Corralation between AB SKF and Essity AB
Assuming the 90 days trading horizon AB SKF is expected to generate 1.54 times less return on investment than Essity AB. In addition to that, AB SKF is 1.4 times more volatile than Essity AB. It trades about 0.04 of its total potential returns per unit of risk. Essity AB is currently generating about 0.08 per unit of volatility. If you would invest 23,157 in Essity AB on November 3, 2024 and sell it today you would earn a total of 4,933 from holding Essity AB or generate 21.3% 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. Essity AB
Performance |
| Timeline |
| AB SKF |
| Essity AB |
AB SKF and Essity AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB SKF and Essity AB
The main advantage of trading using opposite AB SKF and Essity AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB SKF position performs unexpectedly, Essity AB 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 Essity AB will offset losses from the drop in Essity AB's long position.The idea behind AB SKF and Essity 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.| Essity AB vs. Svenska Cellulosa Aktiebolaget | Essity AB vs. ASSA ABLOY AB | Essity AB vs. AB Electrolux | Essity AB vs. AB SKF |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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