Correlation Between Sandvik AB and Metacon AB

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Can any of the company-specific risk be diversified away by investing in both Sandvik AB and Metacon AB 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 Sandvik AB and Metacon AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandvik AB and Metacon AB, you can compare the effects of market volatilities on Sandvik AB and Metacon AB 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 Sandvik AB with a short position of Metacon AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandvik AB and Metacon AB.

Diversification Opportunities for Sandvik AB and Metacon AB

SandvikMetaconDiversified AwaySandvikMetaconDiversified Away100%
0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Sandvik and Metacon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sandvik AB and Metacon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metacon AB and Sandvik 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 Sandvik AB are associated (or correlated) with Metacon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metacon AB has no effect on the direction of Sandvik AB i.e., Sandvik AB and Metacon AB go up and down completely randomly.

Pair Corralation between Sandvik AB and Metacon AB

Assuming the 90 days trading horizon Sandvik AB is expected to generate 0.24 times more return on investment than Metacon AB. However, Sandvik AB is 4.12 times less risky than Metacon AB. It trades about 0.01 of its potential returns per unit of risk. Metacon AB is currently generating about -0.21 per unit of risk. If you would invest  21,100  in Sandvik AB on October 25, 2024 and sell it today you would earn a total of  50.00  from holding Sandvik AB or generate 0.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sandvik AB  vs.  Metacon AB

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 020406080100120
JavaScript chart by amCharts 3.21.15SAND META
       Timeline  
Sandvik AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Sandvik AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sandvik AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan195200205210215220
Metacon AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Metacon AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.120.140.160.180.20.220.24

Sandvik AB and Metacon AB Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.08-3.06-2.03-1.020.01.02.043.074.115.15 0.050.100.150.20
JavaScript chart by amCharts 3.21.15SAND META
       Returns  

Pair Trading with Sandvik AB and Metacon AB

The main advantage of trading using opposite Sandvik AB and Metacon AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandvik AB position performs unexpectedly, Metacon AB 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 Metacon AB will offset losses from the drop in Metacon AB's long position.
The idea behind Sandvik AB and Metacon 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 CEOs Directory module to screen CEOs from public companies around the world.

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