Correlation Between SSAB AB and BillerudKorsnas

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

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

Diversification Opportunities for SSAB AB and BillerudKorsnas

0.72

Correlation Coefficient

SSAB AB  BillerudKorsnas

Poor diversification

The 3 months correlation between SSAB and BillerudKorsnas is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB and BillerudKorsnas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BillerudKorsnas 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 BillerudKorsnas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BillerudKorsnas AB has no effect on the direction of SSAB AB i.e., SSAB AB and BillerudKorsnas go up and down completely randomly.

Pair Corralation between SSAB AB and BillerudKorsnas

Assuming the 90 days trading horizon SSAB AB is expected to generate 1.56 times more return on investment than BillerudKorsnas. However, SSAB AB is 1.56 times more volatile than BillerudKorsnas AB. It trades about 0.46 of its potential returns per unit of risk. BillerudKorsnas AB is currently generating about 0.18 per unit of risk. If you would invest  5,410  in SSAB AB on December 3, 2024 and sell it today you would earn a total of  1,048  from holding SSAB AB or generate 19.37% return on investment over 90 days.

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

SSAB AB  vs.  BillerudKorsnas AB

SSAB AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SSAB AB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, SSAB AB sustained solid returns over the last few months and may actually be approaching a breakup point.

BillerudKorsnas AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BillerudKorsnas AB are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, BillerudKorsnas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SSAB AB and BillerudKorsnas

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

The idea behind SSAB AB and BillerudKorsnas 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.