Correlation Between Scandinavian Brake and Penneo AS
Can any of the company-specific risk be diversified away by investing in both Scandinavian Brake and Penneo AS 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 Scandinavian Brake and Penneo AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Brake Systems and Penneo AS, you can compare the effects of market volatilities on Scandinavian Brake and Penneo AS 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 Scandinavian Brake with a short position of Penneo AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Brake and Penneo AS.
Diversification Opportunities for Scandinavian Brake and Penneo AS
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Scandinavian and Penneo is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Brake Systems and Penneo AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penneo AS and Scandinavian Brake 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 Scandinavian Brake Systems are associated (or correlated) with Penneo AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penneo AS has no effect on the direction of Scandinavian Brake i.e., Scandinavian Brake and Penneo AS go up and down completely randomly.
Pair Corralation between Scandinavian Brake and Penneo AS
Assuming the 90 days trading horizon Scandinavian Brake is expected to generate 21.66 times less return on investment than Penneo AS. But when comparing it to its historical volatility, Scandinavian Brake Systems is 18.4 times less risky than Penneo AS. It trades about 0.18 of its potential returns per unit of risk. Penneo AS is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 802.00 in Penneo AS on September 22, 2024 and sell it today you would earn a total of 773.00 from holding Penneo AS or generate 96.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.65% |
Values | Daily Returns |
Scandinavian Brake Systems vs. Penneo AS
Performance |
Timeline |
Scandinavian Brake |
Penneo AS |
Scandinavian Brake and Penneo AS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scandinavian Brake and Penneo AS
The main advantage of trading using opposite Scandinavian Brake and Penneo AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Brake position performs unexpectedly, Penneo AS 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 Penneo AS will offset losses from the drop in Penneo AS's long position.Scandinavian Brake vs. Broendbyernes IF Fodbold | Scandinavian Brake vs. Matas AS | Scandinavian Brake vs. NKT AS | Scandinavian Brake vs. Jyske Bank AS |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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