Correlation Between Saniona AB and Fluoguide

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

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

Diversification Opportunities for Saniona AB and Fluoguide

0.55

Correlation Coefficient

Saniona AB  Fluoguide

Very weak diversification

The 3 months correlation between Saniona and Fluoguide is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Saniona AB and Fluoguide AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluoguide AS and Saniona 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 Saniona AB are associated (or correlated) with Fluoguide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluoguide AS has no effect on the direction of Saniona AB i.e., Saniona AB and Fluoguide go up and down completely randomly.

Pair Corralation between Saniona AB and Fluoguide

Assuming the 90 days trading horizon Saniona AB is expected to under-perform the Fluoguide. But the stock apears to be less risky and, when comparing its historical volatility, Saniona AB is 1.55 times less risky than Fluoguide. The stock trades about -0.16 of its potential returns per unit of risk. The Fluoguide AS is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  3,480  in Fluoguide AS on October 26, 2024 and sell it today you would earn a total of  1,510  from holding Fluoguide AS or generate 43.39% return on investment over 90 days.

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

Saniona AB  vs.  Fluoguide AS

Saniona AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saniona AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Saniona AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Fluoguide AS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fluoguide AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fluoguide unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saniona AB and Fluoguide

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

The idea behind Saniona AB and Fluoguide AS 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.