Correlation Between Dear Cashmere and Sandvik AB
Can any of the company-specific risk be diversified away by investing in both Dear Cashmere and Sandvik 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 Dear Cashmere and Sandvik AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dear Cashmere Holding and Sandvik AB ADR, you can compare the effects of market volatilities on Dear Cashmere and Sandvik 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 Dear Cashmere with a short position of Sandvik AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and Sandvik AB.
Diversification Opportunities for Dear Cashmere and Sandvik AB
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dear and Sandvik is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and Sandvik AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandvik AB ADR and Dear Cashmere 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 Dear Cashmere Holding are associated (or correlated) with Sandvik AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandvik AB ADR has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and Sandvik AB go up and down completely randomly.
Pair Corralation between Dear Cashmere and Sandvik AB
Given the investment horizon of 90 days Dear Cashmere Holding is expected to under-perform the Sandvik AB. In addition to that, Dear Cashmere is 5.31 times more volatile than Sandvik AB ADR. It trades about -0.06 of its total potential returns per unit of risk. Sandvik AB ADR is currently generating about 0.18 per unit of volatility. If you would invest 1,804 in Sandvik AB ADR on December 28, 2024 and sell it today you would earn a total of 437.00 from holding Sandvik AB ADR or generate 24.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.36% |
Values | Daily Returns |
Dear Cashmere Holding vs. Sandvik AB ADR
Performance |
Timeline |
Dear Cashmere Holding |
Sandvik AB ADR |
Dear Cashmere and Sandvik AB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dear Cashmere and Sandvik AB
The main advantage of trading using opposite Dear Cashmere and Sandvik AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dear Cashmere position performs unexpectedly, Sandvik 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 Sandvik AB will offset losses from the drop in Sandvik AB's long position.Dear Cashmere vs. One World Universe | Dear Cashmere vs. All American Pet | Dear Cashmere vs. Ilustrato Pictures | Dear Cashmere vs. Quality Industrial Corp |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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