Correlation Between SBB-B and Lindab International

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

By analyzing existing cross correlation between Samhllsbyggnadsbolaget i Norden and Lindab International AB, you can compare the effects of market volatilities on SBB-B and Lindab International 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 SBB-B with a short position of Lindab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBB-B and Lindab International.

Diversification Opportunities for SBB-B and Lindab International

-0.81

Correlation Coefficient

SBB-B  Lindab International

Pay attention - limited upside

The 3 months correlation between SBB-B and Lindab is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Samhllsbyggnadsbolaget i Norde and Lindab International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindab International and SBB-B 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 Samhllsbyggnadsbolaget i Norden are associated (or correlated) with Lindab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindab International has no effect on the direction of SBB-B i.e., SBB-B and Lindab International go up and down completely randomly.

Pair Corralation between SBB-B and Lindab International

Assuming the 90 days trading horizon Samhllsbyggnadsbolaget i Norden is expected to generate 2.22 times more return on investment than Lindab International. However, SBB-B is 2.22 times more volatile than Lindab International AB. It trades about 0.06 of its potential returns per unit of risk. Lindab International AB is currently generating about -0.05 per unit of risk. If you would invest  386.00  in Samhllsbyggnadsbolaget i Norden on November 29, 2024 and sell it today you would earn a total of  41.00  from holding Samhllsbyggnadsbolaget i Norden or generate 10.62% return on investment over 90 days.

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

Samhllsbyggnadsbolaget i Norde  vs.  Lindab International AB

Samhllsbyggnadsbolaget

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samhllsbyggnadsbolaget i Norden are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SBB-B unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lindab International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lindab International AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SBB-B and Lindab International

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

The idea behind Samhllsbyggnadsbolaget i Norden and Lindab International 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.