Correlation Between Sectra AB and Troax Group

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

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

Diversification Opportunities for Sectra AB and Troax Group

0.26

Correlation Coefficient

Sectra AB  Troax Group

Modest diversification

The 3 months correlation between Sectra and Troax is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sectra AB and Troax Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Troax Group AB and Sectra 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 Sectra AB are associated (or correlated) with Troax Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Troax Group AB has no effect on the direction of Sectra AB i.e., Sectra AB and Troax Group go up and down completely randomly.

Pair Corralation between Sectra AB and Troax Group

Assuming the 90 days trading horizon Sectra AB is expected to under-perform the Troax Group. But the stock apears to be less risky and, when comparing its historical volatility, Sectra AB is 1.13 times less risky than Troax Group. The stock trades about -0.19 of its potential returns per unit of risk. The Troax Group AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  20,850  in Troax Group AB on November 29, 2024 and sell it today you would lose (450.00) from holding Troax Group AB or give up 2.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sectra AB  vs.  Troax Group AB

Sectra AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sectra AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Troax Group AB

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sectra AB and Troax Group

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

The idea behind Sectra AB and Troax Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.