Correlation Between Sdiptech and Lifco AB

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

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

Diversification Opportunities for Sdiptech and Lifco AB

-0.32

Correlation Coefficient

Sdiptech  Lifco AB

Very good diversification

The 3 months correlation between Sdiptech and Lifco is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sdiptech AB and Lifco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifco AB and Sdiptech 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 Sdiptech AB are associated (or correlated) with Lifco AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifco AB has no effect on the direction of Sdiptech i.e., Sdiptech and Lifco AB go up and down completely randomly.

Pair Corralation between Sdiptech and Lifco AB

Assuming the 90 days trading horizon Sdiptech AB is expected to under-perform the Lifco AB. In addition to that, Sdiptech is 1.41 times more volatile than Lifco AB. It trades about -0.06 of its total potential returns per unit of risk. Lifco AB is currently generating about 0.3 per unit of volatility. If you would invest  30,880  in Lifco AB on November 20, 2024 and sell it today you would earn a total of  8,800  from holding Lifco AB or generate 28.5% return on investment over 90 days.

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

Sdiptech AB  vs.  Lifco AB

Sdiptech AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sdiptech AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lifco AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lifco AB are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Lifco AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sdiptech and Lifco AB

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

The idea behind Sdiptech AB and Lifco 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.