Correlation Between Softronic and Generic Sweden
Can any of the company-specific risk be diversified away by investing in both Softronic and Generic Sweden 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 Generic Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Softronic AB and Generic Sweden publ, you can compare the effects of market volatilities on Softronic and Generic Sweden 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 Generic Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Softronic and Generic Sweden.
Diversification Opportunities for Softronic and Generic Sweden
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Softronic and Generic is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Softronic AB and Generic Sweden publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Sweden publ 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 Generic Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Sweden publ has no effect on the direction of Softronic i.e., Softronic and Generic Sweden go up and down completely randomly.
Pair Corralation between Softronic and Generic Sweden
Assuming the 90 days trading horizon Softronic is expected to generate 3.1 times less return on investment than Generic Sweden. But when comparing it to its historical volatility, Softronic AB is 2.53 times less risky than Generic Sweden. It trades about 0.18 of its potential returns per unit of risk. Generic Sweden publ is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,420 in Generic Sweden publ on August 25, 2024 and sell it today you would earn a total of 540.00 from holding Generic Sweden publ or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Softronic AB vs. Generic Sweden publ
Performance |
| Timeline |
| Softronic AB |
| Generic Sweden publ |
Softronic and Generic Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Softronic and Generic Sweden
The main advantage of trading using opposite Softronic and Generic Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Softronic position performs unexpectedly, Generic Sweden 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 Generic Sweden will offset losses from the drop in Generic Sweden's long position.The idea behind Softronic AB and Generic Sweden publ 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.| Generic Sweden vs. Novotek AB | Generic Sweden vs. Addnode Group AB | Generic Sweden vs. Softronic AB | Generic Sweden vs. CTT Systems 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |