Correlation Between SBB-B and Lifco AB

Can any of the company-specific risk be diversified away by investing in both SBB-B and Lifco 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 SBB-B and Lifco AB 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 Lifco AB, you can compare the effects of market volatilities on SBB-B and Lifco 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 SBB-B with a short position of Lifco AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBB-B and Lifco AB.

Diversification Opportunities for SBB-B and Lifco AB

-0.05

Correlation Coefficient

SBB-B  Lifco AB

Good diversification

The 3 months correlation between SBB-B and Lifco is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Samhllsbyggnadsbolaget i Norde and Lifco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifco AB 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 Lifco AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifco AB has no effect on the direction of SBB-B i.e., SBB-B and Lifco AB go up and down completely randomly.

Pair Corralation between SBB-B and Lifco AB

Assuming the 90 days trading horizon Samhllsbyggnadsbolaget i Norden is expected to under-perform the Lifco AB. In addition to that, SBB-B is 2.25 times more volatile than Lifco AB. It trades about -0.11 of its total potential returns per unit of risk. Lifco AB is currently generating about 0.14 per unit of volatility. If you would invest  32,060  in Lifco AB on December 28, 2024 and sell it today you would earn a total of  4,620  from holding Lifco AB or generate 14.41% return on investment over 90 days.

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

Samhllsbyggnadsbolaget i Norde  vs.  Lifco AB

Samhllsbyggnadsbolaget

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samhllsbyggnadsbolaget i Norden 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lifco AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifco AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Lifco AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBB-B and Lifco AB

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

The idea behind Samhllsbyggnadsbolaget i Norden and Lifco 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.