Correlation Between Nyfosa AB and AB Sagax

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

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

Diversification Opportunities for Nyfosa AB and AB Sagax

0.93

Correlation Coefficient

Nyfosa AB  AB Sagax

Almost no diversification

The 3 months correlation between Nyfosa and SAGA-B is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Nyfosa AB and AB Sagax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Sagax and Nyfosa 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 Nyfosa AB are associated (or correlated) with AB Sagax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Sagax has no effect on the direction of Nyfosa AB i.e., Nyfosa AB and AB Sagax go up and down completely randomly.

Pair Corralation between Nyfosa AB and AB Sagax

Assuming the 90 days trading horizon Nyfosa AB is expected to under-perform the AB Sagax. In addition to that, Nyfosa AB is 1.16 times more volatile than AB Sagax. It trades about -0.2 of its total potential returns per unit of risk. AB Sagax is currently generating about -0.09 per unit of volatility. If you would invest  22,620  in AB Sagax on December 25, 2024 and sell it today you would lose (2,340) from holding AB Sagax or give up 10.34% of portfolio value over 90 days.

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

Nyfosa AB  vs.  AB Sagax

Nyfosa AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nyfosa AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AB Sagax

Risk-Adjusted Performance

Very Weak

Over the last 90 days AB Sagax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Nyfosa AB and AB Sagax

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

The idea behind Nyfosa AB and AB Sagax 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.