Correlation Between AB Sagax and Wallenstam

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

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

Diversification Opportunities for AB Sagax and Wallenstam

0.6

Correlation Coefficient

AB Sagax  Wallenstam

Poor diversification

The 3 months correlation between SAGA-B and Wallenstam is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AB Sagax and Wallenstam AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallenstam AB 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 Wallenstam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallenstam AB has no effect on the direction of AB Sagax i.e., AB Sagax and Wallenstam go up and down completely randomly.

Pair Corralation between AB Sagax and Wallenstam

Assuming the 90 days trading horizon AB Sagax is expected to under-perform the Wallenstam. In addition to that, AB Sagax is 1.12 times more volatile than Wallenstam AB. It trades about -0.06 of its total potential returns per unit of risk. Wallenstam AB is currently generating about -0.04 per unit of volatility. If you would invest  4,992  in Wallenstam AB on December 1, 2024 and sell it today you would lose (222.00) from holding Wallenstam AB or give up 4.45% of portfolio value over 90 days.

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

AB Sagax  vs.  Wallenstam AB

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.

Wallenstam AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wallenstam AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Wallenstam is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AB Sagax and Wallenstam

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

The idea behind AB Sagax and Wallenstam 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.