Correlation Between AB SKF and Troax Group
Can any of the company-specific risk be diversified away by investing in both AB SKF and Troax 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 Troax 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 Troax Group AB, you can compare the effects of market volatilities on AB SKF and Troax 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 Troax Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB SKF and Troax Group.
Diversification Opportunities for AB SKF and Troax Group
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SKF-B and Troax is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding AB SKF and Troax Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Troax 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 Troax Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Troax Group AB has no effect on the direction of AB SKF i.e., AB SKF and Troax Group go up and down completely randomly.
Pair Corralation between AB SKF and Troax Group
Assuming the 90 days trading horizon AB SKF is expected to generate 1.18 times more return on investment than Troax Group. However, AB SKF is 1.18 times more volatile than Troax Group AB. It trades about 0.1 of its potential returns per unit of risk. Troax Group AB is currently generating about -0.09 per unit of risk. If you would invest 20,550 in AB SKF on September 5, 2024 and sell it today you would earn a total of 850.00 from holding AB SKF or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB SKF vs. Troax Group AB
Performance |
| Timeline |
| AB SKF |
| Troax Group AB |
AB SKF and Troax Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB SKF and Troax Group
The main advantage of trading using opposite AB SKF and Troax Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB SKF position performs unexpectedly, Troax 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 Troax Group will offset losses from the drop in Troax Group's long position.The idea behind AB SKF and Troax 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.| Troax Group vs. Bufab Holding AB | Troax Group vs. Thule Group AB | Troax Group vs. Beijer Ref AB | Troax Group vs. Lifco 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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