Correlation Between SVENSKA CELLULO and Spirent Communications

Can any of the company-specific risk be diversified away by investing in both SVENSKA CELLULO and Spirent Communications 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 SVENSKA CELLULO and Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SVENSKA CELLULO B and Spirent Communications plc, you can compare the effects of market volatilities on SVENSKA CELLULO and Spirent Communications 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 SVENSKA CELLULO with a short position of Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SVENSKA CELLULO and Spirent Communications.

Diversification Opportunities for SVENSKA CELLULO and Spirent Communications

-0.19

Correlation Coefficient

SVENSKA CELLULO  Spirent Communications

Good diversification

The 3 months correlation between SVENSKA and Spirent is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SVENSKA CELLULO B and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and SVENSKA CELLULO 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 SVENSKA CELLULO B are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of SVENSKA CELLULO i.e., SVENSKA CELLULO and Spirent Communications go up and down completely randomly.

Pair Corralation between SVENSKA CELLULO and Spirent Communications

Assuming the 90 days trading horizon SVENSKA CELLULO B is expected to under-perform the Spirent Communications. But the stock apears to be less risky and, when comparing its historical volatility, SVENSKA CELLULO B is 1.09 times less risky than Spirent Communications. The stock trades about -0.13 of its potential returns per unit of risk. The Spirent Communications plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  216.00  in Spirent Communications plc on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Spirent Communications plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

SVENSKA CELLULO B   vs.  Spirent Communications plc

SVENSKA CELLULO B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVENSKA CELLULO B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SVENSKA CELLULO is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Spirent Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spirent Communications plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Spirent Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SVENSKA CELLULO and Spirent Communications

The main advantage of trading using opposite SVENSKA CELLULO and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SVENSKA CELLULO position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.

The idea behind SVENSKA CELLULO B and Spirent Communications plc 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.