Correlation Between USWE Sports and Soder Sportfiske

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

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

Diversification Opportunities for USWE Sports and Soder Sportfiske

-0.27

Correlation Coefficient

USWE Sports  Soder Sportfiske

Very good diversification

The 3 months correlation between USWE and Soder is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding USWE Sports AB and Soder Sportfiske AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soder Sportfiske and USWE Sports 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 USWE Sports AB are associated (or correlated) with Soder Sportfiske. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soder Sportfiske has no effect on the direction of USWE Sports i.e., USWE Sports and Soder Sportfiske go up and down completely randomly.

Pair Corralation between USWE Sports and Soder Sportfiske

Assuming the 90 days trading horizon USWE Sports AB is expected to generate 0.96 times more return on investment than Soder Sportfiske. However, USWE Sports AB is 1.04 times less risky than Soder Sportfiske. It trades about 0.14 of its potential returns per unit of risk. Soder Sportfiske AB is currently generating about 0.0 per unit of risk. If you would invest  700.00  in USWE Sports AB on September 3, 2024 and sell it today you would earn a total of  220.00  from holding USWE Sports AB or generate 31.43% return on investment over 90 days.

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

USWE Sports AB  vs.  Soder Sportfiske AB

USWE Sports AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE Sports AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, USWE Sports unveiled solid returns over the last few months and may actually be approaching a breakup point.

Soder Sportfiske

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soder Sportfiske AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Soder Sportfiske 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 USWE Sports and Soder Sportfiske

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

The idea behind USWE Sports AB and Soder Sportfiske 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.