Correlation Between SBB-D and AB Sagax

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

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

Diversification Opportunities for SBB-D and AB Sagax

0.86

Correlation Coefficient

SBB-D  AB Sagax

Very poor diversification

The 3 months correlation between SBB-D and SAGA-B is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Samhaellsbyggnadsbolaget i Nor and AB Sagax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Sagax and SBB-D 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 Samhaellsbyggnadsbolaget i Norden are associated (or correlated) with AB Sagax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Sagax has no effect on the direction of SBB-D i.e., SBB-D and AB Sagax go up and down completely randomly.

Pair Corralation between SBB-D and AB Sagax

Assuming the 90 days trading horizon Samhaellsbyggnadsbolaget i Norden is expected to under-perform the AB Sagax. In addition to that, SBB-D is 4.48 times more volatile than AB Sagax. It trades about -0.06 of its total potential returns per unit of risk. AB Sagax is currently generating about -0.25 per unit of volatility. If you would invest  27,920  in AB Sagax on October 9, 2024 and sell it today you would lose (5,520) from holding AB Sagax or give up 19.77% of portfolio value over 90 days.

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

Samhaellsbyggnadsbolaget i Nor  vs.  AB Sagax

Samhaellsbyggnadsbol

Risk-Adjusted Performance

0 of 100

Very Weak

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

AB Sagax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AB Sagax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SBB-D and AB Sagax

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

The idea behind Samhaellsbyggnadsbolaget i Norden and AB Sagax 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.