Correlation Between Duni AB and Svolder AB

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

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

Diversification Opportunities for Duni AB and Svolder AB

0.76

Correlation Coefficient

Duni AB  Svolder AB

Poor diversification

The 3 months correlation between Duni and Svolder is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Duni AB and Svolder AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svolder AB and Duni AB 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 Duni AB are associated (or correlated) with Svolder AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svolder AB has no effect on the direction of Duni AB i.e., Duni AB and Svolder AB go up and down completely randomly.

Pair Corralation between Duni AB and Svolder AB

Assuming the 90 days trading horizon Duni AB is expected to generate 2.8 times less return on investment than Svolder AB. But when comparing it to its historical volatility, Duni AB is 2.49 times less risky than Svolder AB. It trades about 0.02 of its potential returns per unit of risk. Svolder AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,698  in Svolder AB on October 10, 2024 and sell it today you would earn a total of  602.00  from holding Svolder AB or generate 7.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Duni AB  vs.  Svolder AB

Duni AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duni AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Svolder AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Duni AB and Svolder AB

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

The idea behind Duni AB and Svolder 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.