Correlation Between SVENSKA AEROGEL and FEMALE HEALTH

Can any of the company-specific risk be diversified away by investing in both SVENSKA AEROGEL and FEMALE HEALTH 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 SVENSKA AEROGEL and FEMALE HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SVENSKA AEROGEL HOLDING and FEMALE HEALTH, you can compare the effects of market volatilities on SVENSKA AEROGEL and FEMALE HEALTH 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 SVENSKA AEROGEL with a short position of FEMALE HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of SVENSKA AEROGEL and FEMALE HEALTH.

Diversification Opportunities for SVENSKA AEROGEL and FEMALE HEALTH

0.07

Correlation Coefficient

SVENSKA AEROGEL  FEMALE HEALTH

Significant diversification

The 3 months correlation between SVENSKA and FEMALE is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SVENSKA AEROGEL HOLDING and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH and SVENSKA AEROGEL 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 SVENSKA AEROGEL HOLDING are associated (or correlated) with FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of SVENSKA AEROGEL i.e., SVENSKA AEROGEL and FEMALE HEALTH go up and down completely randomly.

Pair Corralation between SVENSKA AEROGEL and FEMALE HEALTH

Assuming the 90 days horizon SVENSKA AEROGEL HOLDING is expected to under-perform the FEMALE HEALTH. But the stock apears to be less risky and, when comparing its historical volatility, SVENSKA AEROGEL HOLDING is 1.75 times less risky than FEMALE HEALTH. The stock trades about -0.63 of its potential returns per unit of risk. The FEMALE HEALTH is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  67.00  in FEMALE HEALTH on October 8, 2024 and sell it today you would lose (4.00) from holding FEMALE HEALTH or give up 5.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

SVENSKA AEROGEL HOLDING  vs.  FEMALE HEALTH

SVENSKA AEROGEL HOLDING

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days SVENSKA AEROGEL HOLDING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, SVENSKA AEROGEL reported solid returns over the last few months and may actually be approaching a breakup point.

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SVENSKA AEROGEL and FEMALE HEALTH

The main advantage of trading using opposite SVENSKA AEROGEL and FEMALE HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SVENSKA AEROGEL position performs unexpectedly, FEMALE HEALTH 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 FEMALE HEALTH will offset losses from the drop in FEMALE HEALTH's long position.

The idea behind SVENSKA AEROGEL HOLDING and FEMALE HEALTH 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.

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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.