Correlation Between Lagercrantz Group and Serstech

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

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

Diversification Opportunities for Lagercrantz Group and Serstech

0.34

Correlation Coefficient

Lagercrantz Group  Serstech

Weak diversification

The 3 months correlation between Lagercrantz and Serstech is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lagercrantz Group AB and Serstech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serstech AB and Lagercrantz Group 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 Lagercrantz Group AB are associated (or correlated) with Serstech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serstech AB has no effect on the direction of Lagercrantz Group i.e., Lagercrantz Group and Serstech go up and down completely randomly.

Pair Corralation between Lagercrantz Group and Serstech

Assuming the 90 days trading horizon Lagercrantz Group AB is expected to generate 0.36 times more return on investment than Serstech. However, Lagercrantz Group AB is 2.8 times less risky than Serstech. It trades about 0.31 of its potential returns per unit of risk. Serstech AB is currently generating about -0.2 per unit of risk. If you would invest  19,350  in Lagercrantz Group AB on September 22, 2024 and sell it today you would earn a total of  1,770  from holding Lagercrantz Group AB or generate 9.15% return on investment over 90 days.

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

Lagercrantz Group AB  vs.  Serstech AB

Lagercrantz Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lagercrantz Group AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Lagercrantz Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Serstech AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Serstech AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Serstech is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lagercrantz Group and Serstech

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

The idea behind Lagercrantz Group AB and Serstech 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.