Correlation Between Stella Jones and Svenska Cellulosa
Can any of the company-specific risk be diversified away by investing in both Stella Jones 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 Stella Jones and Svenska Cellulosa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stella Jones and Svenska Cellulosa Aktiebolaget, you can compare the effects of market volatilities on Stella Jones 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 Stella Jones with a short position of Svenska Cellulosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stella Jones and Svenska Cellulosa.
Diversification Opportunities for Stella Jones and Svenska Cellulosa
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stella and Svenska is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Stella Jones and Svenska Cellulosa Aktiebolaget in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Cellulosa and Stella Jones 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 Stella Jones 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 Stella Jones i.e., Stella Jones and Svenska Cellulosa go up and down completely randomly.
Pair Corralation between Stella Jones and Svenska Cellulosa
Assuming the 90 days horizon Stella Jones is expected to under-perform the Svenska Cellulosa. In addition to that, Stella Jones is 2.19 times more volatile than Svenska Cellulosa Aktiebolaget. It trades about -0.24 of its total potential returns per unit of risk. Svenska Cellulosa Aktiebolaget is currently generating about -0.02 per unit of volatility. If you would invest 1,333 in Svenska Cellulosa Aktiebolaget on August 28, 2024 and sell it today you would lose (13.00) from holding Svenska Cellulosa Aktiebolaget or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stella Jones vs. Svenska Cellulosa Aktiebolaget
Performance |
| Timeline |
| Stella Jones |
| Svenska Cellulosa |
Stella Jones and Svenska Cellulosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stella Jones and Svenska Cellulosa
The main advantage of trading using opposite Stella Jones and Svenska Cellulosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stella Jones 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.| Stella Jones vs. Canfor | Stella Jones vs. West Fraser Timber | Stella Jones vs. Interfor | Stella Jones vs. Svenska Cellulosa Aktiebolaget |
| Svenska Cellulosa vs. Interfor | Svenska Cellulosa vs. Western Forest Products | Svenska Cellulosa vs. Stella Jones | Svenska Cellulosa vs. Simpson Manufacturing |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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