Correlation Between Scandi Standard and Midsona AB

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

By analyzing existing cross correlation between Scandi Standard publ and Midsona AB, you can compare the effects of market volatilities on Scandi Standard and Midsona AB 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 Scandi Standard with a short position of Midsona AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandi Standard and Midsona AB.

Diversification Opportunities for Scandi Standard and Midsona AB

0.51

Correlation Coefficient

Scandi Standard  Midsona AB

Very weak diversification

The 3 months correlation between Scandi and Midsona is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Scandi Standard publ and Midsona AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midsona AB and Scandi Standard 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 Scandi Standard publ are associated (or correlated) with Midsona AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midsona AB has no effect on the direction of Scandi Standard i.e., Scandi Standard and Midsona AB go up and down completely randomly.

Pair Corralation between Scandi Standard and Midsona AB

Assuming the 90 days trading horizon Scandi Standard is expected to generate 2.57 times less return on investment than Midsona AB. But when comparing it to its historical volatility, Scandi Standard publ is 1.53 times less risky than Midsona AB. It trades about 0.18 of its potential returns per unit of risk. Midsona AB is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,120  in Midsona AB on November 29, 2024 and sell it today you would earn a total of  130.00  from holding Midsona AB or generate 11.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	78.26%
Values	Daily Returns

Scandi Standard publ  vs.  Midsona AB

Scandi Standard publ

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Scandi Standard publ are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Scandi Standard is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Midsona AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Midsona AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Midsona AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Scandi Standard and Midsona AB

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

The idea behind Scandi Standard publ and Midsona AB 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.