Correlation Between C Rad and Sectra AB

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

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

Diversification Opportunities for C Rad and Sectra AB

-0.57

Correlation Coefficient

C Rad  Sectra AB

Excellent diversification

The 3 months correlation between CRAD-B and Sectra is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding C Rad AB and Sectra AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sectra AB and C Rad 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 C Rad AB are associated (or correlated) with Sectra AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sectra AB has no effect on the direction of C Rad i.e., C Rad and Sectra AB go up and down completely randomly.

Pair Corralation between C Rad and Sectra AB

Assuming the 90 days trading horizon C Rad AB is expected to generate 1.09 times more return on investment than Sectra AB. However, C Rad is 1.09 times more volatile than Sectra AB. It trades about 0.07 of its potential returns per unit of risk. Sectra AB is currently generating about -0.21 per unit of risk. If you would invest  3,070  in C Rad AB on December 1, 2024 and sell it today you would earn a total of  205.00  from holding C Rad AB or generate 6.68% return on investment over 90 days.

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

C Rad AB  vs.  Sectra AB

C Rad AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in C Rad AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, C Rad may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sectra AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sectra 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 fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with C Rad and Sectra AB

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

The idea behind C Rad AB and Sectra 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.