Correlation Between Svolder AB and Duni AB

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

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

Diversification Opportunities for Svolder AB and Duni AB

0.76

Correlation Coefficient

Svolder AB  Duni AB

Poor diversification

The 3 months correlation between Svolder and Duni is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Svolder AB and Duni AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duni AB and Svolder 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 Svolder AB are associated (or correlated) with Duni AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duni AB has no effect on the direction of Svolder AB i.e., Svolder AB and Duni AB go up and down completely randomly.

Pair Corralation between Svolder AB and Duni AB

Assuming the 90 days trading horizon Svolder AB is expected to generate 2.49 times more return on investment than Duni AB. However, Svolder AB is 2.49 times more volatile than Duni AB. It trades about 0.02 of its potential returns per unit of risk. Duni AB is currently generating about 0.02 per unit of risk. If you would invest  7,698  in Svolder AB on October 10, 2024 and sell it today you would earn a total of  602.00  from holding Svolder AB or generate 7.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Svolder AB  vs.  Duni AB

Svolder AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Svolder AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Duni AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duni AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 Svolder AB and Duni AB

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

The idea behind Svolder AB and Duni 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.