Correlation Between SSAB AB and Rottneros
Can any of the company-specific risk be diversified away by investing in both SSAB AB and Rottneros 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 Rottneros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSAB AB and Rottneros AB, you can compare the effects of market volatilities on SSAB AB and Rottneros 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 Rottneros. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSAB AB and Rottneros.
Diversification Opportunities for SSAB AB and Rottneros
Modest diversification
The 3 months correlation between SSAB and Rottneros is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB and Rottneros AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rottneros 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 Rottneros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rottneros AB has no effect on the direction of SSAB AB i.e., SSAB AB and Rottneros go up and down completely randomly.
Pair Corralation between SSAB AB and Rottneros
Assuming the 90 days trading horizon SSAB AB is expected to generate 0.95 times more return on investment than Rottneros. However, SSAB AB is 1.05 times less risky than Rottneros. It trades about -0.01 of its potential returns per unit of risk. Rottneros AB is currently generating about -0.03 per unit of risk. If you would invest 5,730 in SSAB AB on October 25, 2024 and sell it today you would lose (1,139) from holding SSAB AB or give up 19.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSAB AB vs. Rottneros AB
Performance |
| Timeline |
| SSAB AB |
| Rottneros AB |
SSAB AB and Rottneros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSAB AB and Rottneros
The main advantage of trading using opposite SSAB AB and Rottneros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSAB AB position performs unexpectedly, Rottneros 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 Rottneros will offset losses from the drop in Rottneros' long position.The idea behind SSAB AB and Rottneros AB 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.| Rottneros vs. BillerudKorsnas AB | Rottneros vs. SSAB AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Axfood 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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