Correlation Between UFP Industries and SVENSKA CELLULO

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

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

Diversification Opportunities for UFP Industries and SVENSKA CELLULO

0.18

Correlation Coefficient

UFP Industries  SVENSKA CELLULO

Average diversification

The 3 months correlation between UFP and SVENSKA is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding UFP Industries and SVENSKA CELLULO B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVENSKA CELLULO B and UFP Industries 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 UFP Industries are associated (or correlated) with SVENSKA CELLULO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVENSKA CELLULO B has no effect on the direction of UFP Industries i.e., UFP Industries and SVENSKA CELLULO go up and down completely randomly.

Pair Corralation between UFP Industries and SVENSKA CELLULO

Assuming the 90 days horizon UFP Industries is expected to under-perform the SVENSKA CELLULO. But the stock apears to be less risky and, when comparing its historical volatility, UFP Industries is 1.01 times less risky than SVENSKA CELLULO. The stock trades about -0.58 of its potential returns per unit of risk. The SVENSKA CELLULO B is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,252  in SVENSKA CELLULO B on October 12, 2024 and sell it today you would lose (16.00) from holding SVENSKA CELLULO B or give up 1.28% of portfolio value over 90 days.

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

UFP Industries  vs.  SVENSKA CELLULO B

UFP Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

SVENSKA CELLULO B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVENSKA CELLULO B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SVENSKA CELLULO is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with UFP Industries and SVENSKA CELLULO

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

The idea behind UFP Industries and SVENSKA CELLULO B 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.