Correlation Between SSAB AB and Dovre Group
Can any of the company-specific risk be diversified away by investing in both SSAB AB and Dovre Group 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 Dovre Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSAB AB ser and Dovre Group Plc, you can compare the effects of market volatilities on SSAB AB and Dovre Group 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 Dovre Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSAB AB and Dovre Group.
Diversification Opportunities for SSAB AB and Dovre Group
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SSAB and Dovre is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB ser and Dovre Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dovre Group Plc 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 ser are associated (or correlated) with Dovre Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dovre Group Plc has no effect on the direction of SSAB AB i.e., SSAB AB and Dovre Group go up and down completely randomly.
Pair Corralation between SSAB AB and Dovre Group
Assuming the 90 days trading horizon SSAB AB is expected to generate 8.25 times less return on investment than Dovre Group. In addition to that, SSAB AB is 1.14 times more volatile than Dovre Group Plc. It trades about 0.02 of its total potential returns per unit of risk. Dovre Group Plc is currently generating about 0.19 per unit of volatility. If you would invest 32.00 in Dovre Group Plc on September 4, 2024 and sell it today you would earn a total of 3.00 from holding Dovre Group Plc or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSAB AB ser vs. Dovre Group Plc
Performance |
| Timeline |
| SSAB AB ser |
| Dovre Group Plc |
SSAB AB and Dovre Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSAB AB and Dovre Group
The main advantage of trading using opposite SSAB AB and Dovre Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSAB AB position performs unexpectedly, Dovre Group 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 Dovre Group will offset losses from the drop in Dovre Group's long position.| SSAB AB vs. SSAB AB ser | SSAB AB vs. Outokumpu Oyj | SSAB AB vs. Metsa Board Oyj | SSAB AB vs. Telia Company AB |
| Dovre Group vs. Telefonaktiebolaget LM Ericsson | Dovre Group vs. Telia Company AB | Dovre Group vs. SSAB AB ser | Dovre Group vs. SSAB AB ser |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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