Correlation Between AB SKF and Swedish Orphan
Can any of the company-specific risk be diversified away by investing in both AB SKF and Swedish Orphan 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 Swedish Orphan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB SKF and Swedish Orphan Biovitrum, you can compare the effects of market volatilities on AB SKF and Swedish Orphan 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 Swedish Orphan. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB SKF and Swedish Orphan.
Diversification Opportunities for AB SKF and Swedish Orphan
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between SKF-B and Swedish is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding AB SKF and Swedish Orphan Biovitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Orphan Biovitrum 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 Swedish Orphan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Orphan Biovitrum has no effect on the direction of AB SKF i.e., AB SKF and Swedish Orphan go up and down completely randomly.
Pair Corralation between AB SKF and Swedish Orphan
Assuming the 90 days trading horizon AB SKF is expected to generate 0.72 times more return on investment than Swedish Orphan. However, AB SKF is 1.39 times less risky than Swedish Orphan. It trades about 0.03 of its potential returns per unit of risk. Swedish Orphan Biovitrum is currently generating about -0.17 per unit of risk. If you would invest 20,300 in AB SKF on August 29, 2024 and sell it today you would earn a total of 200.00 from holding AB SKF or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB SKF vs. Swedish Orphan Biovitrum
Performance |
| Timeline |
| AB SKF |
| Swedish Orphan Biovitrum |
AB SKF and Swedish Orphan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB SKF and Swedish Orphan
The main advantage of trading using opposite AB SKF and Swedish Orphan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB SKF position performs unexpectedly, Swedish Orphan 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 Swedish Orphan will offset losses from the drop in Swedish Orphan's long position.The idea behind AB SKF and Swedish Orphan Biovitrum 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.| Swedish Orphan vs. Getinge AB ser | Swedish Orphan vs. Elekta AB | Swedish Orphan vs. AB SKF | Swedish Orphan vs. Saab 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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