Correlation Between Studsvik and NOTE AB
Can any of the company-specific risk be diversified away by investing in both Studsvik and NOTE AB 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 Studsvik and NOTE AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Studsvik AB and NOTE AB, you can compare the effects of market volatilities on Studsvik and NOTE AB 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 Studsvik with a short position of NOTE AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Studsvik and NOTE AB.
Diversification Opportunities for Studsvik and NOTE AB
Very good diversification
The 3 months correlation between Studsvik and NOTE is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Studsvik AB and NOTE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOTE AB and Studsvik 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 Studsvik AB are associated (or correlated) with NOTE AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOTE AB has no effect on the direction of Studsvik i.e., Studsvik and NOTE AB go up and down completely randomly.
Pair Corralation between Studsvik and NOTE AB
Assuming the 90 days trading horizon Studsvik is expected to generate 11.09 times less return on investment than NOTE AB. But when comparing it to its historical volatility, Studsvik AB is 3.95 times less risky than NOTE AB. It trades about 0.07 of its potential returns per unit of risk. NOTE AB is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 13,760 in NOTE AB on October 10, 2024 and sell it today you would earn a total of 1,300 from holding NOTE AB or generate 9.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Studsvik AB vs. NOTE AB
Performance |
| Timeline |
| Studsvik AB |
| NOTE AB |
Studsvik and NOTE AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Studsvik and NOTE AB
The main advantage of trading using opposite Studsvik and NOTE AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Studsvik position performs unexpectedly, NOTE AB 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 NOTE AB will offset losses from the drop in NOTE AB's long position.The idea behind Studsvik AB and NOTE 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.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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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