Correlation Between SSAB AB and Hoist Finance
Can any of the company-specific risk be diversified away by investing in both SSAB AB and Hoist Finance 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 Hoist Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSAB AB and Hoist Finance AB, you can compare the effects of market volatilities on SSAB AB and Hoist Finance 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 Hoist Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSAB AB and Hoist Finance.
Diversification Opportunities for SSAB AB and Hoist Finance
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SSAB and Hoist is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB and Hoist Finance AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoist Finance AB 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 Hoist Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoist Finance AB has no effect on the direction of SSAB AB i.e., SSAB AB and Hoist Finance go up and down completely randomly.
Pair Corralation between SSAB AB and Hoist Finance
Assuming the 90 days trading horizon SSAB AB is expected to generate 1.07 times more return on investment than Hoist Finance. However, SSAB AB is 1.07 times more volatile than Hoist Finance AB. It trades about -0.04 of its potential returns per unit of risk. Hoist Finance AB is currently generating about -0.12 per unit of risk. If you would invest 5,130 in SSAB AB on August 30, 2024 and sell it today you would lose (137.00) from holding SSAB AB or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSAB AB vs. Hoist Finance AB
Performance |
| Timeline |
| SSAB AB |
| Hoist Finance AB |
SSAB AB and Hoist Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSAB AB and Hoist Finance
The main advantage of trading using opposite SSAB AB and Hoist Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSAB AB position performs unexpectedly, Hoist Finance 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 Hoist Finance will offset losses from the drop in Hoist Finance's long position.| SSAB AB vs. Boliden AB | SSAB AB vs. SSAB AB | SSAB AB vs. Tele2 AB | SSAB AB vs. Samhllsbyggnadsbolaget i Norden |
| Hoist Finance vs. Intrum Justitia AB | Hoist Finance vs. Inwido AB | Hoist Finance vs. Resurs Holding AB | Hoist Finance vs. Cloetta 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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