Correlation Between Industrivarden and Svolder AB

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

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

Diversification Opportunities for Industrivarden and Svolder AB

-0.09

Correlation Coefficient

Industrivarden  Svolder AB

Good diversification

The 3 months correlation between Industrivarden and Svolder is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Industrivarden AB ser and Svolder AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svolder AB and Industrivarden 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 Industrivarden AB ser 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 Industrivarden i.e., Industrivarden and Svolder AB go up and down completely randomly.

Pair Corralation between Industrivarden and Svolder AB

Assuming the 90 days trading horizon Industrivarden AB ser is expected to generate 0.85 times more return on investment than Svolder AB. However, Industrivarden AB ser is 1.18 times less risky than Svolder AB. It trades about 0.13 of its potential returns per unit of risk. Svolder AB is currently generating about 0.08 per unit of risk. If you would invest  34,910  in Industrivarden AB ser on December 27, 2024 and sell it today you would earn a total of  3,280  from holding Industrivarden AB ser or generate 9.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.77%
Values	Daily Returns

Industrivarden AB ser  vs.  Svolder AB

Industrivarden AB ser

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Industrivarden AB ser are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Industrivarden may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Svolder AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Svolder AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Svolder AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Industrivarden and Svolder AB

The main advantage of trading using opposite Industrivarden and Svolder AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrivarden 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 Industrivarden AB ser 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.