Correlation Between Smart Eye and Storytel

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

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

Diversification Opportunities for Smart Eye and Storytel

-0.47

Correlation Coefficient

Smart Eye  Storytel

Very good diversification

The 3 months correlation between Smart and Storytel is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Smart Eye AB and Storytel AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storytel AB and Smart Eye 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 Smart Eye AB are associated (or correlated) with Storytel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storytel AB has no effect on the direction of Smart Eye i.e., Smart Eye and Storytel go up and down completely randomly.

Pair Corralation between Smart Eye and Storytel

Assuming the 90 days trading horizon Smart Eye AB is expected to under-perform the Storytel. In addition to that, Smart Eye is 1.51 times more volatile than Storytel AB. It trades about -0.02 of its total potential returns per unit of risk. Storytel AB is currently generating about 0.28 per unit of volatility. If you would invest  6,050  in Storytel AB on November 29, 2024 and sell it today you would earn a total of  3,415  from holding Storytel AB or generate 56.45% return on investment over 90 days.

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

Smart Eye AB  vs.  Storytel AB

Smart Eye AB

Risk-Adjusted Performance

Very Weak

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

Storytel AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Storytel AB are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Storytel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smart Eye and Storytel

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

The idea behind Smart Eye AB and Storytel 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.