Correlation Between SSAB AB and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both SSAB AB and Nexam Chemical 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 Nexam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSAB AB and Nexam Chemical Holding, you can compare the effects of market volatilities on SSAB AB and Nexam Chemical 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 Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSAB AB and Nexam Chemical.
Diversification Opportunities for SSAB AB and Nexam Chemical
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SSAB and Nexam is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of SSAB AB i.e., SSAB AB and Nexam Chemical go up and down completely randomly.
Pair Corralation between SSAB AB and Nexam Chemical
Assuming the 90 days trading horizon SSAB AB is expected to under-perform the Nexam Chemical. But the stock apears to be less risky and, when comparing its historical volatility, SSAB AB is 1.83 times less risky than Nexam Chemical. The stock trades about -0.08 of its potential returns per unit of risk. The Nexam Chemical Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 302.00 in Nexam Chemical Holding on September 14, 2024 and sell it today you would earn a total of 89.00 from holding Nexam Chemical Holding or generate 29.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSAB AB vs. Nexam Chemical Holding
Performance |
| Timeline |
| SSAB AB |
| Nexam Chemical Holding |
SSAB AB and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSAB AB and Nexam Chemical
The main advantage of trading using opposite SSAB AB and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSAB AB position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.| SSAB AB vs. Boliden AB | SSAB AB vs. SSAB AB | SSAB AB vs. Tele2 AB | SSAB AB vs. Samhllsbyggnadsbolaget i Norden |
| Nexam Chemical vs. SSAB AB | Nexam Chemical vs. Svenska Cellulosa Aktiebolaget | Nexam Chemical vs. Axfood AB | Nexam Chemical vs. Proact IT Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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