Correlation Between AB SKF and Maven Wireless

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

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

Diversification Opportunities for AB SKF and Maven Wireless

-0.65

Correlation Coefficient

AB SKF  Maven Wireless

Excellent diversification

The 3 months correlation between SKF-A and Maven is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding AB SKF and Maven Wireless Sweden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maven Wireless Sweden and AB SKF 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 AB SKF are associated (or correlated) with Maven Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maven Wireless Sweden has no effect on the direction of AB SKF i.e., AB SKF and Maven Wireless go up and down completely randomly.

Pair Corralation between AB SKF and Maven Wireless

Assuming the 90 days trading horizon AB SKF is expected to generate 0.64 times more return on investment than Maven Wireless. However, AB SKF is 1.57 times less risky than Maven Wireless. It trades about 0.15 of its potential returns per unit of risk. Maven Wireless Sweden is currently generating about -0.14 per unit of risk. If you would invest  18,380  in AB SKF on September 13, 2024 and sell it today you would earn a total of  3,520  from holding AB SKF or generate 19.15% return on investment over 90 days.

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

AB SKF  vs.  Maven Wireless Sweden

AB SKF

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AB SKF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AB SKF unveiled solid returns over the last few months and may actually be approaching a breakup point.

Maven Wireless Sweden

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AB SKF and Maven Wireless

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

The idea behind AB SKF and Maven Wireless Sweden 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..