Correlation Between SSAB AB and Saniona AB

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

Diversification Opportunities for SSAB AB and Saniona AB

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between SSAB and Saniona is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB and Saniona AB TO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saniona AB TO and SSAB 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 SSAB AB are associated (or correlated) with Saniona AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saniona AB TO has no effect on the direction of SSAB AB i.e., SSAB AB and Saniona AB go up and down completely randomly.

Pair Corralation between SSAB AB and Saniona AB

Assuming the 90 days trading horizon SSAB AB is expected to under-perform the Saniona AB. But the stock apears to be less risky and, when comparing its historical volatility, SSAB AB is 10.71 times less risky than Saniona AB. The stock trades about -0.05 of its potential returns per unit of risk. The Saniona AB TO is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Saniona AB TO on September 24, 2024 and sell it today you would earn a total of  153.00  from holding Saniona AB TO or generate 364.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy70.55%
ValuesDaily Returns

SSAB AB  vs.  Saniona AB TO

 Performance 
       Timeline  
SSAB AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SSAB AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Saniona AB TO 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Saniona AB TO are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Saniona AB sustained solid returns over the last few months and may actually be approaching a breakup point.

SSAB AB and Saniona AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SSAB AB and Saniona AB

The main advantage of trading using opposite SSAB AB and Saniona AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSAB AB position performs unexpectedly, Saniona 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 Saniona AB will offset losses from the drop in Saniona AB's long position.
The idea behind SSAB AB and Saniona AB TO 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.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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