Correlation Between Scandinavian ChemoTech and Inwido AB

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

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

Diversification Opportunities for Scandinavian ChemoTech and Inwido AB

-0.67

Correlation Coefficient

Scandinavian ChemoTech  Inwido AB

Excellent diversification

The 3 months correlation between Scandinavian and Inwido is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian ChemoTech AB and Inwido AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inwido AB and Scandinavian ChemoTech 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 Scandinavian ChemoTech AB are associated (or correlated) with Inwido AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inwido AB has no effect on the direction of Scandinavian ChemoTech i.e., Scandinavian ChemoTech and Inwido AB go up and down completely randomly.

Pair Corralation between Scandinavian ChemoTech and Inwido AB

Assuming the 90 days trading horizon Scandinavian ChemoTech AB is expected to under-perform the Inwido AB. In addition to that, Scandinavian ChemoTech is 3.58 times more volatile than Inwido AB. It trades about -0.09 of its total potential returns per unit of risk. Inwido AB is currently generating about 0.15 per unit of volatility. If you would invest  18,300  in Inwido AB on November 29, 2024 and sell it today you would earn a total of  2,560  from holding Inwido AB or generate 13.99% return on investment over 90 days.

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

Scandinavian ChemoTech AB  vs.  Inwido AB

Scandinavian ChemoTech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scandinavian ChemoTech AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Inwido AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inwido AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Inwido AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scandinavian ChemoTech and Inwido AB

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

The idea behind Scandinavian ChemoTech AB and Inwido 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.