Correlation Between Svolder AB and ALM Equity

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

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

Diversification Opportunities for Svolder AB and ALM Equity

-0.81

Correlation Coefficient

Svolder AB  ALM Equity

Pay attention - limited upside

The 3 months correlation between Svolder and ALM is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Svolder AB and ALM Equity AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALM Equity 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 ALM Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALM Equity AB has no effect on the direction of Svolder AB i.e., Svolder AB and ALM Equity go up and down completely randomly.

Pair Corralation between Svolder AB and ALM Equity

Assuming the 90 days trading horizon Svolder AB is expected to generate 0.51 times more return on investment than ALM Equity. However, Svolder AB is 1.98 times less risky than ALM Equity. It trades about 0.1 of its potential returns per unit of risk. ALM Equity AB is currently generating about -0.2 per unit of risk. If you would invest  5,160  in Svolder AB on December 30, 2024 and sell it today you would earn a total of  495.00  from holding Svolder AB or generate 9.59% return on investment over 90 days.

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

Svolder AB  vs.  ALM Equity AB

Svolder AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Svolder AB are ranked lower than 7 (%) 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.

ALM Equity AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALM Equity AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Svolder AB and ALM Equity

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

The idea behind Svolder AB and ALM Equity 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 Transaction History module to view history of all your transactions and understand their impact on performance.