Correlation Between Skanska AB and InMode

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

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

Diversification Opportunities for Skanska AB and InMode

0.91

Correlation Coefficient

Skanska AB  InMode

Almost no diversification

The 3 months correlation between Skanska and InMode is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Skanska AB ser and InMode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMode 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 ser are associated (or correlated) with InMode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InMode has no effect on the direction of Skanska AB i.e., Skanska AB and InMode go up and down completely randomly.

Pair Corralation between Skanska AB and InMode

Assuming the 90 days horizon Skanska AB ser is expected to generate 1.0 times more return on investment than InMode. However, Skanska AB is 1.0 times more volatile than InMode. It trades about 0.14 of its potential returns per unit of risk. InMode is currently generating about 0.05 per unit of risk. If you would invest  2,105  in Skanska AB ser on December 26, 2024 and sell it today you would earn a total of  371.00  from holding Skanska AB ser or generate 17.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Skanska AB ser  vs.  InMode

Skanska AB ser

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Skanska AB ser are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Skanska AB showed solid returns over the last few months and may actually be approaching a breakup point.

InMode

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, InMode may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Skanska AB and InMode

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

The idea behind Skanska AB ser and InMode 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.