Correlation Between SSAB AB and Stora Enso
Can any of the company-specific risk be diversified away by investing in both SSAB AB and Stora Enso 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 Stora Enso 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 Stora Enso Oyj, you can compare the effects of market volatilities on SSAB AB and Stora Enso 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 Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSAB AB and Stora Enso.
Diversification Opportunities for SSAB AB and Stora Enso
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between SSAB and Stora is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB ser and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj 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 Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of SSAB AB i.e., SSAB AB and Stora Enso go up and down completely randomly.
Pair Corralation between SSAB AB and Stora Enso
Assuming the 90 days trading horizon SSAB AB ser is expected to generate 1.4 times more return on investment than Stora Enso. However, SSAB AB is 1.4 times more volatile than Stora Enso Oyj. It trades about -0.02 of its potential returns per unit of risk. Stora Enso Oyj is currently generating about -0.35 per unit of risk. If you would invest 444.00 in SSAB AB ser on August 27, 2024 and sell it today you would lose (7.00) from holding SSAB AB ser or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SSAB AB ser vs. Stora Enso Oyj
Performance |
| Timeline |
| SSAB AB ser |
| Stora Enso Oyj |
SSAB AB and Stora Enso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SSAB AB and Stora Enso
The main advantage of trading using opposite SSAB AB and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSAB AB position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.| SSAB AB vs. Outokumpu Oyj | SSAB AB vs. Nordea Bank Abp | SSAB AB vs. Telia Company AB | SSAB AB vs. Wartsila Oyj Abp |
| Stora Enso vs. Stora Enso Oyj | Stora Enso vs. Metsa Board Oyj | Stora Enso vs. UPM Kymmene Oyj | Stora Enso vs. Huhtamaki Oyj |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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