Correlation Between Serstech and Swedencare Publ

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

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

Diversification Opportunities for Serstech and Swedencare Publ

0.59

Correlation Coefficient

Serstech  Swedencare Publ

Very weak diversification

The 3 months correlation between Serstech and Swedencare is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Serstech AB and Swedencare publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedencare publ AB and Serstech 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 Serstech AB are associated (or correlated) with Swedencare Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedencare publ AB has no effect on the direction of Serstech i.e., Serstech and Swedencare Publ go up and down completely randomly.

Pair Corralation between Serstech and Swedencare Publ

Assuming the 90 days trading horizon Serstech AB is expected to generate 1.95 times more return on investment than Swedencare Publ. However, Serstech is 1.95 times more volatile than Swedencare publ AB. It trades about 0.05 of its potential returns per unit of risk. Swedencare publ AB is currently generating about -0.06 per unit of risk. If you would invest  106.00  in Serstech AB on October 8, 2024 and sell it today you would earn a total of  32.00  from holding Serstech AB or generate 30.19% return on investment over 90 days.

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

Serstech AB  vs.  Swedencare publ AB

Serstech AB

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Serstech AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Serstech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Swedencare publ AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swedencare publ AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Swedencare Publ sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Serstech and Swedencare Publ

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

The idea behind Serstech AB and Swedencare publ 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.