Correlation Between Softronic and Fram Skandinavien

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Softronic and Fram Skandinavien 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 Softronic and Fram Skandinavien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softronic AB and Fram Skandinavien AB, you can compare the effects of market volatilities on Softronic and Fram Skandinavien 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 Softronic with a short position of Fram Skandinavien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softronic and Fram Skandinavien.

Diversification Opportunities for Softronic and Fram Skandinavien

-0.84
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Softronic and Fram is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and Fram Skandinavien AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fram Skandinavien and Softronic 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 Softronic AB are associated (or correlated) with Fram Skandinavien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fram Skandinavien has no effect on the direction of Softronic i.e., Softronic and Fram Skandinavien go up and down completely randomly.

Pair Corralation between Softronic and Fram Skandinavien

Assuming the 90 days trading horizon Softronic AB is expected to generate 0.29 times more return on investment than Fram Skandinavien. However, Softronic AB is 3.45 times less risky than Fram Skandinavien. It trades about -0.07 of its potential returns per unit of risk. Fram Skandinavien AB is currently generating about -0.1 per unit of risk. If you would invest  2,390  in Softronic AB on August 29, 2024 and sell it today you would lose (40.00) from holding Softronic AB or give up 1.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Softronic AB  vs.  Fram Skandinavien AB

 Performance 
       Timeline  
Softronic AB 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Softronic AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Softronic is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Fram Skandinavien 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fram Skandinavien AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Softronic and Fram Skandinavien Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Softronic and Fram Skandinavien

The main advantage of trading using opposite Softronic and Fram Skandinavien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softronic position performs unexpectedly, Fram Skandinavien 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 Fram Skandinavien will offset losses from the drop in Fram Skandinavien's long position.
The idea behind Softronic AB and Fram Skandinavien 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.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

Other Complementary Tools

Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account