Correlation Between Svolder AB and L E

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

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

Diversification Opportunities for Svolder AB and L E

-0.39

Correlation Coefficient

Svolder AB  L E

Very good diversification

The 3 months correlation between Svolder and LUND-B is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Svolder AB and L E Lundbergfretagen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L E Lundbergfretagen 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 L E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L E Lundbergfretagen has no effect on the direction of Svolder AB i.e., Svolder AB and L E go up and down completely randomly.

Pair Corralation between Svolder AB and L E

Assuming the 90 days trading horizon Svolder AB is expected to generate 1.27 times more return on investment than L E. However, Svolder AB is 1.27 times more volatile than L E Lundbergfretagen. It trades about 0.11 of its potential returns per unit of risk. L E Lundbergfretagen is currently generating about 0.03 per unit of risk. If you would invest  8,200  in Svolder AB on December 24, 2024 and sell it today you would earn a total of  550.00  from holding Svolder AB or generate 6.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.88%
Values	Daily Returns

Svolder AB  vs.  L E Lundbergfretagen

Svolder AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Svolder AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Svolder AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

L E Lundbergfretagen

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in L E Lundbergfretagen are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, L E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Svolder AB and L E

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

The idea behind Svolder AB and L E Lundbergfretagen 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.