Correlation Between Sweco AB and Fasadgruppen Group
Can any of the company-specific risk be diversified away by investing in both Sweco AB and Fasadgruppen 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 Sweco AB and Fasadgruppen Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sweco AB and Fasadgruppen Group AB, you can compare the effects of market volatilities on Sweco AB and Fasadgruppen 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 Sweco AB with a short position of Fasadgruppen Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sweco AB and Fasadgruppen Group.
Diversification Opportunities for Sweco AB and Fasadgruppen Group
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sweco and Fasadgruppen is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sweco AB and Fasadgruppen Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fasadgruppen Group and Sweco 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 Sweco AB are associated (or correlated) with Fasadgruppen Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fasadgruppen Group has no effect on the direction of Sweco AB i.e., Sweco AB and Fasadgruppen Group go up and down completely randomly.
Pair Corralation between Sweco AB and Fasadgruppen Group
Assuming the 90 days trading horizon Sweco AB is expected to under-perform the Fasadgruppen Group. But the stock apears to be less risky and, when comparing its historical volatility, Sweco AB is 1.15 times less risky than Fasadgruppen Group. The stock trades about -0.21 of its potential returns per unit of risk. The Fasadgruppen Group AB is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 4,850 in Fasadgruppen Group AB on September 1, 2024 and sell it today you would lose (365.00) from holding Fasadgruppen Group AB or give up 7.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sweco AB vs. Fasadgruppen Group AB
Performance |
| Timeline |
| Sweco AB |
| Fasadgruppen Group |
Sweco AB and Fasadgruppen Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sweco AB and Fasadgruppen Group
The main advantage of trading using opposite Sweco AB and Fasadgruppen Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sweco AB position performs unexpectedly, Fasadgruppen 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 Fasadgruppen Group will offset losses from the drop in Fasadgruppen Group's long position.The idea behind Sweco AB and Fasadgruppen Group 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.| Fasadgruppen Group vs. Green Landscaping Group | Fasadgruppen Group vs. Volati AB | Fasadgruppen Group vs. Instalco Intressenter AB | Fasadgruppen Group vs. Sdiptech 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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