Correlation Between AB Volvo and Sedana Medical
Can any of the company-specific risk be diversified away by investing in both AB Volvo and Sedana Medical 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 AB Volvo and Sedana Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and Sedana Medical AB, you can compare the effects of market volatilities on AB Volvo and Sedana Medical 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 AB Volvo with a short position of Sedana Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and Sedana Medical.
Diversification Opportunities for AB Volvo and Sedana Medical
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VOLV-B and Sedana is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Sedana Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sedana Medical AB and AB Volvo 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 AB Volvo are associated (or correlated) with Sedana Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sedana Medical AB has no effect on the direction of AB Volvo i.e., AB Volvo and Sedana Medical go up and down completely randomly.
Pair Corralation between AB Volvo and Sedana Medical
Assuming the 90 days trading horizon AB Volvo is expected to generate 0.31 times more return on investment than Sedana Medical. However, AB Volvo is 3.27 times less risky than Sedana Medical. It trades about -0.05 of its potential returns per unit of risk. Sedana Medical AB is currently generating about -0.18 per unit of risk. If you would invest 27,720 in AB Volvo on August 26, 2024 and sell it today you would lose (570.00) from holding AB Volvo or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Volvo vs. Sedana Medical AB
Performance |
| Timeline |
| AB Volvo |
| Sedana Medical AB |
AB Volvo and Sedana Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and Sedana Medical
The main advantage of trading using opposite AB Volvo and Sedana Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo position performs unexpectedly, Sedana Medical 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 Sedana Medical will offset losses from the drop in Sedana Medical's long position.| AB Volvo vs. AstraZeneca PLC | AB Volvo vs. H M Hennes | AB Volvo vs. Telefonaktiebolaget LM Ericsson | AB Volvo vs. Investor AB ser |
| Sedana Medical vs. Surgical Science Sweden | Sedana Medical vs. Bonesupport Holding AB | Sedana Medical vs. Swedencare publ AB | Sedana Medical vs. Oncopeptides 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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