Correlation Between Loomis AB and Skanska AB

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

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

Diversification Opportunities for Loomis AB and Skanska AB

0.71

Correlation Coefficient

Loomis AB  Skanska AB

Poor diversification

The 3 months correlation between Loomis and Skanska is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Loomis AB ser and Skanska AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skanska AB and Loomis 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 Loomis AB ser are associated (or correlated) with Skanska AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skanska AB has no effect on the direction of Loomis AB i.e., Loomis AB and Skanska AB go up and down completely randomly.

Pair Corralation between Loomis AB and Skanska AB

Assuming the 90 days trading horizon Loomis AB ser is expected to generate 1.01 times more return on investment than Skanska AB. However, Loomis AB is 1.01 times more volatile than Skanska AB. It trades about 0.09 of its potential returns per unit of risk. Skanska AB is currently generating about 0.07 per unit of risk. If you would invest  31,780  in Loomis AB ser on October 10, 2024 and sell it today you would earn a total of  1,880  from holding Loomis AB ser or generate 5.92% return on investment over 90 days.

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

Loomis AB ser  vs.  Skanska AB

Loomis AB ser

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Loomis AB ser are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Loomis AB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Skanska AB

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Skanska AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Skanska AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Loomis AB and Skanska AB

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

The idea behind Loomis AB ser and Skanska 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.