Correlation Between Arctic Blue and Swedencare Publ

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

By analyzing existing cross correlation between Arctic Blue Beverages and Swedencare publ AB, you can compare the effects of market volatilities on Arctic Blue and Swedencare Publ 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 Arctic Blue with a short position of Swedencare Publ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Blue and Swedencare Publ.

Diversification Opportunities for Arctic Blue and Swedencare Publ

-0.36

Correlation Coefficient

Arctic Blue  Swedencare Publ

Very good diversification

The 3 months correlation between Arctic and Swedencare is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Blue Beverages and Swedencare publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedencare publ AB and Arctic Blue 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 Arctic Blue Beverages are associated (or correlated) with Swedencare Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedencare publ AB has no effect on the direction of Arctic Blue i.e., Arctic Blue and Swedencare Publ go up and down completely randomly.

Pair Corralation between Arctic Blue and Swedencare Publ

Assuming the 90 days trading horizon Arctic Blue Beverages is expected to generate 11.78 times more return on investment than Swedencare Publ. However, Arctic Blue is 11.78 times more volatile than Swedencare publ AB. It trades about 0.18 of its potential returns per unit of risk. Swedencare publ AB is currently generating about 0.07 per unit of risk. If you would invest  18.00  in Arctic Blue Beverages on November 21, 2024 and sell it today you would earn a total of  110.00  from holding Arctic Blue Beverages or generate 611.11% return on investment over 90 days.

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

Arctic Blue Beverages  vs.  Swedencare publ AB

Arctic Blue Beverages

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Blue Beverages are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Arctic Blue sustained solid returns over the last few months and may actually be approaching a breakup point.

Swedencare publ AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swedencare publ AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Swedencare Publ is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arctic Blue and Swedencare Publ

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

The idea behind Arctic Blue Beverages and Swedencare publ AB 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.