Correlation Between Fabege AB and AB Sagax

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

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

Diversification Opportunities for Fabege AB and AB Sagax

0.15

Correlation Coefficient

Fabege AB  AB Sagax

Average diversification

The 3 months correlation between Fabege and SAGA-B is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fabege AB and AB Sagax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Sagax and Fabege 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 Fabege AB 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 Fabege AB i.e., Fabege AB and AB Sagax go up and down completely randomly.

Pair Corralation between Fabege AB and AB Sagax

Assuming the 90 days trading horizon Fabege AB is expected to generate 0.83 times more return on investment than AB Sagax. However, Fabege AB is 1.21 times less risky than AB Sagax. It trades about 0.03 of its potential returns per unit of risk. AB Sagax is currently generating about -0.07 per unit of risk. If you would invest  8,443  in Fabege AB on November 29, 2024 and sell it today you would earn a total of  122.00  from holding Fabege AB or generate 1.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.83%
Values	Daily Returns

Fabege AB  vs.  AB Sagax

Fabege AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fabege AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fabege AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

AB Sagax

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fabege AB and AB Sagax

The main advantage of trading using opposite Fabege AB and AB Sagax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabege AB 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 Fabege AB 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.