Correlation Between Online Brands and Saxlund Group

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

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

Diversification Opportunities for Online Brands and Saxlund Group

-0.38

Correlation Coefficient

Online Brands  Saxlund Group

Very good diversification

The 3 months correlation between Online and Saxlund is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Online Brands Nordic and Saxlund Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saxlund Group AB and Online Brands 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 Online Brands Nordic are associated (or correlated) with Saxlund Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saxlund Group AB has no effect on the direction of Online Brands i.e., Online Brands and Saxlund Group go up and down completely randomly.

Pair Corralation between Online Brands and Saxlund Group

Assuming the 90 days trading horizon Online Brands Nordic is expected to generate 0.58 times more return on investment than Saxlund Group. However, Online Brands Nordic is 1.71 times less risky than Saxlund Group. It trades about 0.06 of its potential returns per unit of risk. Saxlund Group AB is currently generating about 0.02 per unit of risk. If you would invest  1,440  in Online Brands Nordic on October 5, 2024 and sell it today you would earn a total of  120.00  from holding Online Brands Nordic or generate 8.33% return on investment over 90 days.

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

Online Brands Nordic  vs.  Saxlund Group AB

Online Brands Nordic

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Online Brands Nordic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Online Brands unveiled solid returns over the last few months and may actually be approaching a breakup point.

Saxlund Group AB

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Saxlund Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Saxlund Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Online Brands and Saxlund Group

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

The idea behind Online Brands Nordic and Saxlund Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.