Correlation Between Sandvik AB and Mowi ASA

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

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

Diversification Opportunities for Sandvik AB and Mowi ASA

0.0

Correlation Coefficient

Sandvik AB  Mowi ASA

Pay attention - limited upside

The 3 months correlation between Sandvik and Mowi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sandvik AB ADR and Mowi ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mowi ASA ADR and Sandvik AB 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 Sandvik AB ADR are associated (or correlated) with Mowi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mowi ASA ADR has no effect on the direction of Sandvik AB i.e., Sandvik AB and Mowi ASA go up and down completely randomly.

Pair Corralation between Sandvik AB and Mowi ASA

If you would invest  1,804  in Sandvik AB ADR on December 29, 2024 and sell it today you would earn a total of  384.00  from holding Sandvik AB ADR or generate 21.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sandvik AB ADR  vs.  Mowi ASA ADR

Sandvik AB ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sandvik AB ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Sandvik AB showed solid returns over the last few months and may actually be approaching a breakup point.

Mowi ASA ADR

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sandvik AB and Mowi ASA

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

The idea behind Sandvik AB ADR and Mowi ASA ADR 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.