Correlation Between SSAB AB and SBB-B
Can any of the company-specific risk be diversified away by investing in both SSAB AB and SBB-B 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 SBB-B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSAB AB and Samhllsbyggnadsbolaget i Norden, you can compare the effects of market volatilities on SSAB AB and SBB-B 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 SBB-B. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSAB AB and SBB-B.
Diversification Opportunities for SSAB AB and SBB-B
Very good diversification
The 3 months correlation between SSAB and SBB-B is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB and Samhllsbyggnadsbolaget i Norde in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhllsbyggnadsbolaget 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 SBB-B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhllsbyggnadsbolaget has no effect on the direction of SSAB AB i.e., SSAB AB and SBB-B go up and down completely randomly.
Pair Corralation between SSAB AB and SBB-B
Assuming the 90 days trading horizon SSAB AB is expected to under-perform the SBB-B. But the stock apears to be less risky and, when comparing its historical volatility, SSAB AB is 2.42 times less risky than SBB-B. The stock trades about -0.06 of its potential returns per unit of risk. The Samhllsbyggnadsbolaget i Norden is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 455.00 in Samhllsbyggnadsbolaget i Norden on September 3, 2024 and sell it today you would lose (69.00) from holding Samhllsbyggnadsbolaget i Norden or give up 15.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSAB AB vs. Samhllsbyggnadsbolaget i Norde
Performance |
| Timeline |
| SSAB AB |
| Samhllsbyggnadsbolaget |
SSAB AB and SBB-B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSAB AB and SBB-B
The main advantage of trading using opposite SSAB AB and SBB-B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSAB AB position performs unexpectedly, SBB-B 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 SBB-B will offset losses from the drop in SBB-B's long position.The idea behind SSAB AB and Samhllsbyggnadsbolaget i Norden 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 Positions Ratings module to 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.
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