Correlation Between Invisio Communications and Scandinavian ChemoTech

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

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

Diversification Opportunities for Invisio Communications and Scandinavian ChemoTech

-0.43

Correlation Coefficient

Invisio Communications  Scandinavian ChemoTech

Very good diversification

The 3 months correlation between Invisio and Scandinavian is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Invisio Communications AB and Scandinavian ChemoTech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian ChemoTech and Invisio Communications 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 Invisio Communications AB are associated (or correlated) with Scandinavian ChemoTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian ChemoTech has no effect on the direction of Invisio Communications i.e., Invisio Communications and Scandinavian ChemoTech go up and down completely randomly.

Pair Corralation between Invisio Communications and Scandinavian ChemoTech

Assuming the 90 days trading horizon Invisio Communications AB is expected to generate 0.36 times more return on investment than Scandinavian ChemoTech. However, Invisio Communications AB is 2.75 times less risky than Scandinavian ChemoTech. It trades about 0.05 of its potential returns per unit of risk. Scandinavian ChemoTech AB is currently generating about -0.03 per unit of risk. If you would invest  18,259  in Invisio Communications AB on October 23, 2024 and sell it today you would earn a total of  9,641  from holding Invisio Communications AB or generate 52.8% return on investment over 90 days.

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

Invisio Communications AB  vs.  Scandinavian ChemoTech AB

Invisio Communications

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invisio Communications AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Invisio Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Scandinavian ChemoTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandinavian ChemoTech AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental 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 Invisio Communications and Scandinavian ChemoTech

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

The idea behind Invisio Communications AB and Scandinavian ChemoTech 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..