Correlation Between Investor and SBB-B

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

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

Diversification Opportunities for Investor and SBB-B

0.58

Correlation Coefficient

Investor  SBB-B

Very weak diversification

The 3 months correlation between Investor and SBB-B is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Samhllsbyggnadsbolaget i Norde in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhllsbyggnadsbolaget and Investor 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 Investor AB ser are associated (or correlated) with SBB-B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhllsbyggnadsbolaget has no effect on the direction of Investor i.e., Investor and SBB-B go up and down completely randomly.

Pair Corralation between Investor and SBB-B

Assuming the 90 days trading horizon Investor AB ser is expected to generate 0.22 times more return on investment than SBB-B. However, Investor AB ser is 4.56 times less risky than SBB-B. It trades about -0.04 of its potential returns per unit of risk. Samhllsbyggnadsbolaget i Norden is currently generating about -0.14 per unit of risk. If you would invest  30,599  in Investor AB ser on August 31, 2024 and sell it today you would lose (834.00) from holding Investor AB ser or give up 2.73% of portfolio value over 90 days.

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

Investor AB ser  vs.  Samhllsbyggnadsbolaget i Norde

Investor AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investor AB ser has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samhllsbyggnadsbolaget

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samhllsbyggnadsbolaget i Norden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Investor and SBB-B

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

The idea behind Investor AB ser and Samhllsbyggnadsbolaget i Norden 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.