Correlation Between TRADEDOUBLER and Svenska Cellulosa

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

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

Diversification Opportunities for TRADEDOUBLER and Svenska Cellulosa

-0.13

Correlation Coefficient

TRADEDOUBLER  Svenska Cellulosa

Good diversification

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

Pair Corralation between TRADEDOUBLER and Svenska Cellulosa

Assuming the 90 days horizon TRADEDOUBLER is expected to generate 13.52 times less return on investment than Svenska Cellulosa. In addition to that, TRADEDOUBLER is 1.7 times more volatile than Svenska Cellulosa Aktiebolaget. It trades about 0.01 of its total potential returns per unit of risk. Svenska Cellulosa Aktiebolaget is currently generating about 0.26 per unit of volatility. If you would invest  1,179  in Svenska Cellulosa Aktiebolaget on October 26, 2024 and sell it today you would earn a total of  79.00  from holding Svenska Cellulosa Aktiebolaget or generate 6.7% return on investment over 90 days.

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

TRADEDOUBLER AB SK  vs.  Svenska Cellulosa Aktiebolaget

TRADEDOUBLER AB SK

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TRADEDOUBLER AB SK are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRADEDOUBLER may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Svenska Cellulosa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Svenska Cellulosa Aktiebolaget has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Svenska Cellulosa is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TRADEDOUBLER and Svenska Cellulosa

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

The idea behind TRADEDOUBLER AB SK and Svenska Cellulosa Aktiebolaget 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.