Correlation Between SVENSKA CELLULO and Corticeira Amorim

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

Diversification Opportunities for SVENSKA CELLULO and Corticeira Amorim

0.58

Correlation Coefficient

SVENSKA CELLULO  Corticeira Amorim

Very weak diversification

The 3 months correlation between SVENSKA and Corticeira is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SVENSKA CELLULO B and Corticeira Amorim SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corticeira Amorim SGPS 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 Corticeira Amorim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corticeira Amorim SGPS has no effect on the direction of SVENSKA CELLULO i.e., SVENSKA CELLULO and Corticeira Amorim go up and down completely randomly.

Pair Corralation between SVENSKA CELLULO and Corticeira Amorim

Assuming the 90 days trading horizon SVENSKA CELLULO B is expected to generate 1.51 times more return on investment than Corticeira Amorim. However, SVENSKA CELLULO is 1.51 times more volatile than Corticeira Amorim SGPS. It trades about -0.04 of its potential returns per unit of risk. Corticeira Amorim SGPS is currently generating about -0.15 per unit of risk. If you would invest  1,271  in SVENSKA CELLULO B on October 12, 2024 and sell it today you would lose (49.00) from holding SVENSKA CELLULO B or give up 3.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

SVENSKA CELLULO B   vs.  Corticeira Amorim SGPS

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.

Corticeira Amorim SGPS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corticeira Amorim SGPS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SVENSKA CELLULO and Corticeira Amorim

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

The idea behind SVENSKA CELLULO B and Corticeira Amorim SGPS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.