Correlation Between SkiStar AB and Peab AB
Can any of the company-specific risk be diversified away by investing in both SkiStar AB and Peab AB 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 Peab AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkiStar AB and Peab AB, you can compare the effects of market volatilities on SkiStar AB and Peab 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 SkiStar AB with a short position of Peab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkiStar AB and Peab AB.
Diversification Opportunities for SkiStar AB and Peab AB
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SkiStar and Peab is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding SkiStar AB and Peab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peab AB 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 Peab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peab AB has no effect on the direction of SkiStar AB i.e., SkiStar AB and Peab AB go up and down completely randomly.
Pair Corralation between SkiStar AB and Peab AB
Assuming the 90 days trading horizon SkiStar AB is expected to generate 1.01 times less return on investment than Peab AB. But when comparing it to its historical volatility, SkiStar AB is 1.16 times less risky than Peab AB. It trades about 0.06 of its potential returns per unit of risk. Peab AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,335 in Peab AB on September 5, 2024 and sell it today you would earn a total of 2,890 from holding Peab AB or generate 54.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
SkiStar AB vs. Peab AB
Performance |
| Timeline |
| SkiStar AB |
| Peab AB |
SkiStar AB and Peab AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkiStar AB and Peab AB
The main advantage of trading using opposite SkiStar AB and Peab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkiStar AB position performs unexpectedly, Peab 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 Peab AB will offset losses from the drop in Peab AB's long position.| SkiStar AB vs. Peab AB | SkiStar AB vs. Axfood AB | SkiStar AB vs. Thule Group AB | SkiStar AB vs. Avanza Bank Holding |
| Peab AB vs. Addtech AB | Peab AB vs. AcadeMedia AB | Peab AB vs. Lime Technologies AB | Peab AB vs. Bio Works Technologies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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