Correlation Between Sotkamo Silver and Alandsbanken Abp
Can any of the company-specific risk be diversified away by investing in both Sotkamo Silver and Alandsbanken Abp 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 Sotkamo Silver and Alandsbanken Abp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotkamo Silver AB and Alandsbanken Abp A, you can compare the effects of market volatilities on Sotkamo Silver and Alandsbanken Abp 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 Sotkamo Silver with a short position of Alandsbanken Abp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotkamo Silver and Alandsbanken Abp.
Diversification Opportunities for Sotkamo Silver and Alandsbanken Abp
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sotkamo and Alandsbanken is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sotkamo Silver AB and Alandsbanken Abp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alandsbanken Abp A and Sotkamo Silver 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 Sotkamo Silver AB are associated (or correlated) with Alandsbanken Abp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alandsbanken Abp A has no effect on the direction of Sotkamo Silver i.e., Sotkamo Silver and Alandsbanken Abp go up and down completely randomly.
Pair Corralation between Sotkamo Silver and Alandsbanken Abp
Assuming the 90 days trading horizon Sotkamo Silver AB is expected to generate 6.83 times more return on investment than Alandsbanken Abp. However, Sotkamo Silver is 6.83 times more volatile than Alandsbanken Abp A. It trades about 0.01 of its potential returns per unit of risk. Alandsbanken Abp A is currently generating about -0.06 per unit of risk. If you would invest 9.59 in Sotkamo Silver AB on August 25, 2024 and sell it today you would lose (0.25) from holding Sotkamo Silver AB or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sotkamo Silver AB vs. Alandsbanken Abp A
Performance |
| Timeline |
| Sotkamo Silver AB |
| Alandsbanken Abp A |
Sotkamo Silver and Alandsbanken Abp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotkamo Silver and Alandsbanken Abp
The main advantage of trading using opposite Sotkamo Silver and Alandsbanken Abp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotkamo Silver position performs unexpectedly, Alandsbanken Abp 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 Alandsbanken Abp will offset losses from the drop in Alandsbanken Abp's long position.| Sotkamo Silver vs. Outokumpu Oyj | Sotkamo Silver vs. SSAB AB ser | Sotkamo Silver vs. Telia Company AB | Sotkamo Silver vs. Wartsila Oyj Abp |
| Alandsbanken Abp vs. Aktia Bank Abp | Alandsbanken Abp vs. Alandsbanken Abp B | Alandsbanken Abp vs. CapMan Oyj B | Alandsbanken Abp vs. Tokmanni Group Oyj |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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