Correlation Between Skanska AB and Fasadgruppen Group

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

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

Diversification Opportunities for Skanska AB and Fasadgruppen Group

-0.72

Correlation Coefficient

Skanska AB  Fasadgruppen Group

Pay attention - limited upside

The 3 months correlation between Skanska and Fasadgruppen is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Skanska AB and Fasadgruppen Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fasadgruppen Group and Skanska 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 Skanska AB are associated (or correlated) with Fasadgruppen Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fasadgruppen Group has no effect on the direction of Skanska AB i.e., Skanska AB and Fasadgruppen Group go up and down completely randomly.

Pair Corralation between Skanska AB and Fasadgruppen Group

Assuming the 90 days trading horizon Skanska AB is expected to generate 0.27 times more return on investment than Fasadgruppen Group. However, Skanska AB is 3.7 times less risky than Fasadgruppen Group. It trades about 0.13 of its potential returns per unit of risk. Fasadgruppen Group AB is currently generating about -0.22 per unit of risk. If you would invest  22,750  in Skanska AB on November 29, 2024 and sell it today you would earn a total of  2,600  from holding Skanska AB or generate 11.43% return on investment over 90 days.

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

Skanska AB  vs.  Fasadgruppen Group AB

Skanska AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Skanska AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Skanska AB may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Fasadgruppen Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fasadgruppen Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Skanska AB and Fasadgruppen Group

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

The idea behind Skanska AB and Fasadgruppen 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.