Correlation Between SkiStar AB and Leading Edge
Can any of the company-specific risk be diversified away by investing in both SkiStar AB and Leading Edge 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 SkiStar AB and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkiStar AB and Leading Edge Materials, you can compare the effects of market volatilities on SkiStar AB and Leading Edge 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 SkiStar AB with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkiStar AB and Leading Edge.
Diversification Opportunities for SkiStar AB and Leading Edge
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between SkiStar and Leading is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SkiStar AB and Leading Edge Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leading Edge Materials and SkiStar AB 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 SkiStar AB are associated (or correlated) with Leading Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leading Edge Materials has no effect on the direction of SkiStar AB i.e., SkiStar AB and Leading Edge go up and down completely randomly.
Pair Corralation between SkiStar AB and Leading Edge
Assuming the 90 days trading horizon SkiStar AB is expected to generate 0.4 times more return on investment than Leading Edge. However, SkiStar AB is 2.51 times less risky than Leading Edge. It trades about 0.09 of its potential returns per unit of risk. Leading Edge Materials is currently generating about -0.03 per unit of risk. If you would invest 11,411 in SkiStar AB on November 5, 2024 and sell it today you would earn a total of 5,359 from holding SkiStar AB or generate 46.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SkiStar AB vs. Leading Edge Materials
Performance |
| Timeline |
| SkiStar AB |
| Leading Edge Materials |
SkiStar AB and Leading Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkiStar AB and Leading Edge
The main advantage of trading using opposite SkiStar AB and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkiStar AB position performs unexpectedly, Leading Edge 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 Leading Edge will offset losses from the drop in Leading Edge's long position.| SkiStar AB vs. Truecaller AB | SkiStar AB vs. Dedicare AB | SkiStar AB vs. RVRC Holding AB | SkiStar AB vs. AddLife AB |
| Leading Edge vs. Boliden AB | Leading Edge vs. AAC Clyde Space | Leading Edge vs. Tele2 AB | Leading Edge vs. BillerudKorsnas 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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