Correlation Between Superior Plus and SVENSKA AEROGEL

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

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

Diversification Opportunities for Superior Plus and SVENSKA AEROGEL

-0.03

Correlation Coefficient

Superior Plus  SVENSKA AEROGEL

Good diversification

The 3 months correlation between Superior and SVENSKA is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and SVENSKA AEROGEL HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVENSKA AEROGEL HOLDING and Superior Plus 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 Superior Plus Corp are associated (or correlated) with SVENSKA AEROGEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVENSKA AEROGEL HOLDING has no effect on the direction of Superior Plus i.e., Superior Plus and SVENSKA AEROGEL go up and down completely randomly.

Pair Corralation between Superior Plus and SVENSKA AEROGEL

Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the SVENSKA AEROGEL. But the stock apears to be less risky and, when comparing its historical volatility, Superior Plus Corp is 157.74 times less risky than SVENSKA AEROGEL. The stock trades about -0.05 of its potential returns per unit of risk. The SVENSKA AEROGEL HOLDING is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  62.00  in SVENSKA AEROGEL HOLDING on October 6, 2024 and sell it today you would lose (12.00) from holding SVENSKA AEROGEL HOLDING or give up 19.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Superior Plus Corp  vs.  SVENSKA AEROGEL HOLDING

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 fragile basic indicators, SVENSKA AEROGEL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Superior Plus and SVENSKA AEROGEL

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

The idea behind Superior Plus Corp and SVENSKA AEROGEL HOLDING 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.