Correlation Between AB Sagax and Fastighets

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

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

Diversification Opportunities for AB Sagax and Fastighets

0.92

Correlation Coefficient

AB Sagax  Fastighets

Almost no diversification

The 3 months correlation between SAGA-A and Fastighets is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding AB Sagax and Fastighets AB Balder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastighets AB Balder and AB Sagax 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 AB Sagax are associated (or correlated) with Fastighets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastighets AB Balder has no effect on the direction of AB Sagax i.e., AB Sagax and Fastighets go up and down completely randomly.

Pair Corralation between AB Sagax and Fastighets

Assuming the 90 days trading horizon AB Sagax is expected to generate 1.1 times more return on investment than Fastighets. However, AB Sagax is 1.1 times more volatile than Fastighets AB Balder. It trades about -0.06 of its potential returns per unit of risk. Fastighets AB Balder is currently generating about -0.18 per unit of risk. If you would invest  22,600  in AB Sagax on December 26, 2024 and sell it today you would lose (2,000) from holding AB Sagax or give up 8.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

AB Sagax  vs.  Fastighets AB Balder

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 uncertain 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.

Fastighets AB Balder

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fastighets AB Balder 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 essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AB Sagax and Fastighets

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

The idea behind AB Sagax and Fastighets AB Balder 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.