Correlation Between SSAB AB and Svenska Cellulosa
Can any of the company-specific risk be diversified away by investing in both SSAB AB and Svenska Cellulosa 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 Svenska Cellulosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSAB AB and Svenska Cellulosa Aktiebolaget, you can compare the effects of market volatilities on SSAB AB and Svenska Cellulosa 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 Svenska Cellulosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSAB AB and Svenska Cellulosa.
Diversification Opportunities for SSAB AB and Svenska Cellulosa
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SSAB and Svenska is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB and Svenska Cellulosa Aktiebolaget in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Cellulosa 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 Svenska Cellulosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Cellulosa has no effect on the direction of SSAB AB i.e., SSAB AB and Svenska Cellulosa go up and down completely randomly.
Pair Corralation between SSAB AB and Svenska Cellulosa
Assuming the 90 days trading horizon SSAB AB is expected to generate 1.66 times more return on investment than Svenska Cellulosa. However, SSAB AB is 1.66 times more volatile than Svenska Cellulosa Aktiebolaget. It trades about 0.46 of its potential returns per unit of risk. Svenska Cellulosa Aktiebolaget is currently generating about 0.1 per unit of risk. If you would invest 4,391 in SSAB AB on November 30, 2024 and sell it today you would earn a total of 2,067 from holding SSAB AB or generate 47.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSAB AB vs. Svenska Cellulosa Aktiebolaget
Performance |
| Timeline |
| SSAB AB |
| Svenska Cellulosa |
SSAB AB and Svenska Cellulosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSAB AB and Svenska Cellulosa
The main advantage of trading using opposite SSAB AB and Svenska Cellulosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSAB AB position performs unexpectedly, Svenska Cellulosa 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 Svenska Cellulosa will offset losses from the drop in Svenska Cellulosa's long position.| SSAB AB vs. Boliden AB | SSAB AB vs. SSAB AB | SSAB AB vs. Tele2 AB | SSAB AB vs. Samhllsbyggnadsbolaget i Norden |
| Svenska Cellulosa vs. Essity AB | Svenska Cellulosa vs. AB SKF | Svenska Cellulosa vs. Skanska AB | Svenska Cellulosa vs. Sandvik 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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