Correlation Between SAXLUND GROUP and CARSALESCOM

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

By analyzing existing cross correlation between SAXLUND GROUP AB and CARSALESCOM, you can compare the effects of market volatilities on SAXLUND GROUP and CARSALESCOM 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 SAXLUND GROUP with a short position of CARSALESCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAXLUND GROUP and CARSALESCOM.

Diversification Opportunities for SAXLUND GROUP and CARSALESCOM

-0.16

Correlation Coefficient

SAXLUND GROUP  CARSALESCOM

Good diversification

The 3 months correlation between SAXLUND and CARSALESCOM is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding SAXLUND GROUP AB and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM and SAXLUND GROUP 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 SAXLUND GROUP AB are associated (or correlated) with CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of SAXLUND GROUP i.e., SAXLUND GROUP and CARSALESCOM go up and down completely randomly.

Pair Corralation between SAXLUND GROUP and CARSALESCOM

If you would invest  20.00  in SAXLUND GROUP AB on October 6, 2024 and sell it today you would earn a total of  0.00  from holding SAXLUND GROUP AB or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

SAXLUND GROUP AB  vs.  CARSALESCOM

SAXLUND GROUP AB

Risk-Adjusted Performance

0 of 100

Solid

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

CARSALESCOM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARSALESCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CARSALESCOM is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SAXLUND GROUP and CARSALESCOM

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

The idea behind SAXLUND GROUP AB and CARSALESCOM 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.