Correlation Between Fastighets and AB Sagax

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

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

Diversification Opportunities for Fastighets and AB Sagax

0.71

Correlation Coefficient

Fastighets  AB Sagax

Poor diversification

The 3 months correlation between Fastighets and SAGA-D is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fastighets AB Balder and AB Sagax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Sagax and Fastighets 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 Fastighets AB Balder are associated (or correlated) with AB Sagax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Sagax has no effect on the direction of Fastighets i.e., Fastighets and AB Sagax go up and down completely randomly.

Pair Corralation between Fastighets and AB Sagax

Assuming the 90 days trading horizon Fastighets AB Balder is expected to under-perform the AB Sagax. In addition to that, Fastighets is 2.04 times more volatile than AB Sagax. It trades about -0.34 of its total potential returns per unit of risk. AB Sagax is currently generating about -0.01 per unit of volatility. If you would invest  3,143  in AB Sagax on October 7, 2024 and sell it today you would lose (3.00) from holding AB Sagax or give up 0.1% of portfolio value over 90 days.

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

Fastighets AB Balder  vs.  AB Sagax

Fastighets AB Balder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fastighets AB Balder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AB Sagax

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fastighets and AB Sagax

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

The idea behind Fastighets AB Balder and AB Sagax 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.