Correlation Between AB SKF and MISUMI GROUP
Can any of the company-specific risk be diversified away by investing in both AB SKF and MISUMI 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 MISUMI 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 MISUMI GROUP INC, you can compare the effects of market volatilities on AB SKF and MISUMI 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 MISUMI GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB SKF and MISUMI GROUP.
Diversification Opportunities for AB SKF and MISUMI GROUP
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SKFB and MISUMI is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding AB SKF and MISUMI GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MISUMI GROUP INC 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 MISUMI GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MISUMI GROUP INC has no effect on the direction of AB SKF i.e., AB SKF and MISUMI GROUP go up and down completely randomly.
Pair Corralation between AB SKF and MISUMI GROUP
Assuming the 90 days trading horizon AB SKF is expected to under-perform the MISUMI GROUP. In addition to that, AB SKF is 1.14 times more volatile than MISUMI GROUP INC. It trades about -0.04 of its total potential returns per unit of risk. MISUMI GROUP INC is currently generating about -0.02 per unit of volatility. If you would invest 1,520 in MISUMI GROUP INC on August 31, 2024 and sell it today you would lose (20.00) from holding MISUMI GROUP INC or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
AB SKF vs. MISUMI GROUP INC
Performance |
| Timeline |
| AB SKF |
| MISUMI GROUP INC |
AB SKF and MISUMI GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB SKF and MISUMI GROUP
The main advantage of trading using opposite AB SKF and MISUMI GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB SKF position performs unexpectedly, MISUMI 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 MISUMI GROUP will offset losses from the drop in MISUMI GROUP's long position.| AB SKF vs. Microbot Medical | AB SKF vs. BII Railway Transportation | AB SKF vs. MeVis Medical Solutions | AB SKF vs. Air Transport Services |
| MISUMI GROUP vs. AM EAGLE OUTFITTERS | MISUMI GROUP vs. Geely Automobile Holdings | MISUMI GROUP vs. GEELY AUTOMOBILE | MISUMI GROUP vs. Gamma Communications plc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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