Correlation Between Svedbergs and Malmbergs Elektriska

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

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

Diversification Opportunities for Svedbergs and Malmbergs Elektriska

-0.13

Correlation Coefficient

Svedbergs  Malmbergs Elektriska

Good diversification

The 3 months correlation between Svedbergs and Malmbergs is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Svedbergs i Dalstorp and Malmbergs Elektriska AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malmbergs Elektriska and Svedbergs 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 Svedbergs i Dalstorp are associated (or correlated) with Malmbergs Elektriska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malmbergs Elektriska has no effect on the direction of Svedbergs i.e., Svedbergs and Malmbergs Elektriska go up and down completely randomly.

Pair Corralation between Svedbergs and Malmbergs Elektriska

Assuming the 90 days trading horizon Svedbergs i Dalstorp is expected to under-perform the Malmbergs Elektriska. In addition to that, Svedbergs is 1.16 times more volatile than Malmbergs Elektriska AB. It trades about -0.02 of its total potential returns per unit of risk. Malmbergs Elektriska AB is currently generating about -0.02 per unit of volatility. If you would invest  4,170  in Malmbergs Elektriska AB on September 2, 2024 and sell it today you would lose (120.00) from holding Malmbergs Elektriska AB or give up 2.88% of portfolio value over 90 days.

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

Svedbergs i Dalstorp  vs.  Malmbergs Elektriska AB

Svedbergs i Dalstorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Svedbergs i Dalstorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Svedbergs is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Malmbergs Elektriska

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malmbergs Elektriska AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Malmbergs Elektriska is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Svedbergs and Malmbergs Elektriska

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

The idea behind Svedbergs i Dalstorp and Malmbergs Elektriska 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.