Correlation Between SSAB AB and OssDsign

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

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

Diversification Opportunities for SSAB AB and OssDsign

-0.49

Correlation Coefficient

SSAB AB  OssDsign

Very good diversification

The 3 months correlation between SSAB and OssDsign is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB and OssDsign AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OssDsign AB and SSAB 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 SSAB AB are associated (or correlated) with OssDsign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OssDsign AB has no effect on the direction of SSAB AB i.e., SSAB AB and OssDsign go up and down completely randomly.

Pair Corralation between SSAB AB and OssDsign

Assuming the 90 days trading horizon SSAB AB is expected to under-perform the OssDsign. But the stock apears to be less risky and, when comparing its historical volatility, SSAB AB is 1.09 times less risky than OssDsign. The stock trades about -0.36 of its potential returns per unit of risk. The OssDsign AB is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest  805.00  in OssDsign AB on September 23, 2024 and sell it today you would earn a total of  190.00  from holding OssDsign AB or generate 23.6% return on investment over 90 days.

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

SSAB AB  vs.  OssDsign AB

SSAB AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSAB AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

OssDsign AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OssDsign AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, OssDsign unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SSAB AB and OssDsign

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

The idea behind SSAB AB and OssDsign 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.