Correlation Between AB Sagax and SBB-D

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

By analyzing existing cross correlation between AB Sagax and Samhaellsbyggnadsbolaget i Norden, you can compare the effects of market volatilities on AB Sagax and SBB-D 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 SBB-D. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Sagax and SBB-D.

Diversification Opportunities for AB Sagax and SBB-D

0.62

Correlation Coefficient

AB Sagax  SBB-D

Poor diversification

The 3 months correlation between SAGA-B and SBB-D is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AB Sagax and Samhaellsbyggnadsbolaget i Nor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhaellsbyggnadsbol 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 SBB-D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhaellsbyggnadsbol has no effect on the direction of AB Sagax i.e., AB Sagax and SBB-D go up and down completely randomly.

Pair Corralation between AB Sagax and SBB-D

Assuming the 90 days trading horizon AB Sagax is expected to generate 2.51 times less return on investment than SBB-D. But when comparing it to its historical volatility, AB Sagax is 1.71 times less risky than SBB-D. It trades about 0.1 of its potential returns per unit of risk. Samhaellsbyggnadsbolaget i Norden is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  675.00  in Samhaellsbyggnadsbolaget i Norden on October 25, 2024 and sell it today you would earn a total of  51.00  from holding Samhaellsbyggnadsbolaget i Norden or generate 7.56% return on investment over 90 days.

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

AB Sagax  vs.  Samhaellsbyggnadsbolaget i Nor

AB Sagax

Risk-Adjusted Performance

0 of 100

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.

Samhaellsbyggnadsbol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samhaellsbyggnadsbolaget i Norden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AB Sagax and SBB-D

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

The idea behind AB Sagax and Samhaellsbyggnadsbolaget i Norden 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.