Correlation Between Sandvik AB and SaltX Technology

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

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

Diversification Opportunities for Sandvik AB and SaltX Technology

0.69

Correlation Coefficient

Sandvik AB  SaltX Technology

Poor diversification

The 3 months correlation between Sandvik and SaltX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sandvik AB and SaltX Technology Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SaltX Technology Holding 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 SaltX Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SaltX Technology Holding has no effect on the direction of Sandvik AB i.e., Sandvik AB and SaltX Technology go up and down completely randomly.

Pair Corralation between Sandvik AB and SaltX Technology

Assuming the 90 days trading horizon Sandvik AB is expected to generate 2.93 times less return on investment than SaltX Technology. But when comparing it to its historical volatility, Sandvik AB is 3.37 times less risky than SaltX Technology. It trades about 0.13 of its potential returns per unit of risk. SaltX Technology Holding is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  337.00  in SaltX Technology Holding on December 23, 2024 and sell it today you would earn a total of  131.00  from holding SaltX Technology Holding or generate 38.87% return on investment over 90 days.

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

Sandvik AB  vs.  SaltX Technology Holding

Sandvik AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sandvik AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sandvik AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

SaltX Technology Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SaltX Technology Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, SaltX Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sandvik AB and SaltX Technology

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

The idea behind Sandvik AB and SaltX Technology Holding 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.