Correlation Between SBB-B and AB Traction

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

Diversification Opportunities for SBB-B and AB Traction

0.4

Correlation Coefficient

SBB-B  AB Traction

Very weak diversification

The 3 months correlation between SBB-B and TRAC-B is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Samhllsbyggnadsbolaget i Norde and AB Traction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Traction 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 AB Traction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Traction has no effect on the direction of SBB-B i.e., SBB-B and AB Traction go up and down completely randomly.

Pair Corralation between SBB-B and AB Traction

Assuming the 90 days trading horizon Samhllsbyggnadsbolaget i Norden is expected to generate 4.01 times more return on investment than AB Traction. However, SBB-B is 4.01 times more volatile than AB Traction. It trades about 0.04 of its potential returns per unit of risk. AB Traction is currently generating about 0.03 per unit of risk. If you would invest  340.00  in Samhllsbyggnadsbolaget i Norden on September 26, 2024 and sell it today you would earn a total of  93.00  from holding Samhllsbyggnadsbolaget i Norden or generate 27.35% return on investment over 90 days.

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

Samhllsbyggnadsbolaget i Norde  vs.  AB Traction

Samhllsbyggnadsbolaget

Risk-Adjusted Performance

0 of 100

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AB Traction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AB Traction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SBB-B and AB Traction

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

The idea behind Samhllsbyggnadsbolaget i Norden and AB Traction 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 Stocks Directory module to find actively traded stocks across global markets.