Correlation Between Synsam AB and Nordnet AB

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

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

Diversification Opportunities for Synsam AB and Nordnet AB

-0.52

Correlation Coefficient

Synsam AB  Nordnet AB

Excellent diversification

The 3 months correlation between Synsam and Nordnet is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Synsam AB and Nordnet AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordnet AB and Synsam 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 Synsam AB are associated (or correlated) with Nordnet AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordnet AB has no effect on the direction of Synsam AB i.e., Synsam AB and Nordnet AB go up and down completely randomly.

Pair Corralation between Synsam AB and Nordnet AB

Assuming the 90 days trading horizon Synsam AB is expected to generate 2.25 times less return on investment than Nordnet AB. In addition to that, Synsam AB is 1.06 times more volatile than Nordnet AB. It trades about 0.02 of its total potential returns per unit of risk. Nordnet AB is currently generating about 0.05 per unit of volatility. If you would invest  15,629  in Nordnet AB on October 12, 2024 and sell it today you would earn a total of  8,131  from holding Nordnet AB or generate 52.03% return on investment over 90 days.

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

Synsam AB  vs.  Nordnet AB

Synsam AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nordnet AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordnet AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nordnet AB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Synsam AB and Nordnet AB

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

The idea behind Synsam AB and Nordnet 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.