Correlation Between Saniona AB and Lipum AB

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

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

Diversification Opportunities for Saniona AB and Lipum AB

-0.18

Correlation Coefficient

Saniona AB  Lipum AB

Good diversification

The 3 months correlation between Saniona and Lipum is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Saniona AB and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum AB 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 Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Saniona AB i.e., Saniona AB and Lipum AB go up and down completely randomly.

Pair Corralation between Saniona AB and Lipum AB

Assuming the 90 days trading horizon Saniona AB is expected to under-perform the Lipum AB. In addition to that, Saniona AB is 1.18 times more volatile than Lipum AB. It trades about -0.01 of its total potential returns per unit of risk. Lipum AB is currently generating about 0.07 per unit of volatility. If you would invest  1,470  in Lipum AB on December 1, 2024 and sell it today you would earn a total of  210.00  from holding Lipum AB or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Saniona AB  vs.  Lipum AB

Saniona AB

Risk-Adjusted Performance

Very Weak

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

Lipum AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lipum AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lipum AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saniona AB and Lipum AB

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

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