Correlation Between SSAB AB and Sinch AB

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

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

Diversification Opportunities for SSAB AB and Sinch AB

0.58

Correlation Coefficient

SSAB AB  Sinch AB

Very weak diversification

The 3 months correlation between SSAB and Sinch is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB and Sinch AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinch 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 Sinch AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinch AB has no effect on the direction of SSAB AB i.e., SSAB AB and Sinch AB go up and down completely randomly.

Pair Corralation between SSAB AB and Sinch AB

Assuming the 90 days trading horizon SSAB AB is expected to generate 0.75 times more return on investment than Sinch AB. However, SSAB AB is 1.34 times less risky than Sinch AB. It trades about 0.23 of its potential returns per unit of risk. Sinch AB is currently generating about 0.03 per unit of risk. If you would invest  4,422  in SSAB AB on December 31, 2024 and sell it today you would earn a total of  1,840  from holding SSAB AB or generate 41.61% return on investment over 90 days.

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

SSAB AB  vs.  Sinch 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.

Sinch AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinch AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sinch AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SSAB AB and Sinch AB

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

The idea behind SSAB AB and Sinch 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.