Correlation Between Sileon AB and Midsona AB

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

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

Diversification Opportunities for Sileon AB and Midsona AB

-0.32

Correlation Coefficient

Sileon AB  Midsona AB

Very good diversification

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

Pair Corralation between Sileon AB and Midsona AB

Assuming the 90 days trading horizon Sileon AB is expected to under-perform the Midsona AB. In addition to that, Sileon AB is 4.72 times more volatile than Midsona AB. It trades about -0.24 of its total potential returns per unit of risk. Midsona AB is currently generating about 0.02 per unit of volatility. If you would invest  1,170  in Midsona AB on September 21, 2024 and sell it today you would earn a total of  10.00  from holding Midsona AB or generate 0.85% return on investment over 90 days.

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

Sileon AB  vs.  Midsona AB

Sileon AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sileon 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 essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Midsona AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Midsona AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Midsona AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sileon AB and Midsona AB

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

The idea behind Sileon AB and Midsona 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.