Correlation Between SkiStar AB and Dedicare

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

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

Diversification Opportunities for SkiStar AB and Dedicare

-0.71

Correlation Coefficient

SkiStar AB  Dedicare

Pay attention - limited upside

The 3 months correlation between SkiStar and Dedicare is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SkiStar AB and Dedicare AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dedicare AB and SkiStar 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 SkiStar AB are associated (or correlated) with Dedicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dedicare AB has no effect on the direction of SkiStar AB i.e., SkiStar AB and Dedicare go up and down completely randomly.

Pair Corralation between SkiStar AB and Dedicare

Assuming the 90 days trading horizon SkiStar AB is expected to generate 0.59 times more return on investment than Dedicare. However, SkiStar AB is 1.69 times less risky than Dedicare. It trades about 0.07 of its potential returns per unit of risk. Dedicare AB is currently generating about -0.09 per unit of risk. If you would invest  15,799  in SkiStar AB on October 7, 2024 and sell it today you would earn a total of  791.00  from holding SkiStar AB or generate 5.01% return on investment over 90 days.

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

SkiStar AB  vs.  Dedicare AB

SkiStar AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SkiStar AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, SkiStar AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dedicare AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dedicare AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SkiStar AB and Dedicare

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

The idea behind SkiStar AB and Dedicare 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.