Correlation Between AB SKF and Systemair
Can any of the company-specific risk be diversified away by investing in both AB SKF and Systemair 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 Systemair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB SKF and Systemair AB, you can compare the effects of market volatilities on AB SKF and Systemair 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 Systemair. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB SKF and Systemair.
Diversification Opportunities for AB SKF and Systemair
Very weak diversification
The 3 months correlation between SKF-B and Systemair is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding AB SKF and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB 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 Systemair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systemair AB has no effect on the direction of AB SKF i.e., AB SKF and Systemair go up and down completely randomly.
Pair Corralation between AB SKF and Systemair
Assuming the 90 days trading horizon AB SKF is expected to under-perform the Systemair. But the stock apears to be less risky and, when comparing its historical volatility, AB SKF is 1.11 times less risky than Systemair. The stock trades about -0.01 of its potential returns per unit of risk. The Systemair AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,702 in Systemair AB on September 5, 2024 and sell it today you would earn a total of 1,548 from holding Systemair AB or generate 20.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AB SKF vs. Systemair AB
Performance |
Timeline |
AB SKF |
Systemair AB |
AB SKF and Systemair Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AB SKF and Systemair
The main advantage of trading using opposite AB SKF and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB SKF position performs unexpectedly, Systemair 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 Systemair will offset losses from the drop in Systemair's long position.The idea behind AB SKF and Systemair 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories |