Correlation Between SOEDER SPORTFISKE and Costco Wholesale

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

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

Diversification Opportunities for SOEDER SPORTFISKE and Costco Wholesale

-0.4

Correlation Coefficient

SOEDER SPORTFISKE  Costco Wholesale

Very good diversification

The 3 months correlation between SOEDER and Costco is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SOEDER SPORTFISKE AB and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp and SOEDER SPORTFISKE 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 SOEDER SPORTFISKE AB are associated (or correlated) with Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of SOEDER SPORTFISKE i.e., SOEDER SPORTFISKE and Costco Wholesale go up and down completely randomly.

Pair Corralation between SOEDER SPORTFISKE and Costco Wholesale

Assuming the 90 days horizon SOEDER SPORTFISKE AB is expected to generate 2.3 times more return on investment than Costco Wholesale. However, SOEDER SPORTFISKE is 2.3 times more volatile than Costco Wholesale Corp. It trades about 0.07 of its potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.13 per unit of risk. If you would invest  240.00  in SOEDER SPORTFISKE AB on October 25, 2024 and sell it today you would earn a total of  25.00  from holding SOEDER SPORTFISKE AB or generate 10.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SOEDER SPORTFISKE AB  vs.  Costco Wholesale Corp

SOEDER SPORTFISKE

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOEDER SPORTFISKE AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOEDER SPORTFISKE reported solid returns over the last few months and may actually be approaching a breakup point.

Costco Wholesale Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Costco Wholesale may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SOEDER SPORTFISKE and Costco Wholesale

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

The idea behind SOEDER SPORTFISKE AB and Costco Wholesale Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.