Correlation Between Waste Management and SAXLUND GROUP

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

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

Diversification Opportunities for Waste Management and SAXLUND GROUP

-0.43

Correlation Coefficient

Waste Management  SAXLUND GROUP

Very good diversification

The 3 months correlation between Waste and SAXLUND is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and SAXLUND GROUP AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAXLUND GROUP AB and Waste Management 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 Waste Management are associated (or correlated) with SAXLUND GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAXLUND GROUP AB has no effect on the direction of Waste Management i.e., Waste Management and SAXLUND GROUP go up and down completely randomly.

Pair Corralation between Waste Management and SAXLUND GROUP

Assuming the 90 days trading horizon Waste Management is expected to generate 604.65 times less return on investment than SAXLUND GROUP. But when comparing it to its historical volatility, Waste Management is 162.84 times less risky than SAXLUND GROUP. It trades about 0.07 of its potential returns per unit of risk. SAXLUND GROUP AB is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  500.00  in SAXLUND GROUP AB on October 5, 2024 and sell it today you would lose (480.00) from holding SAXLUND GROUP AB or give up 96.0% of portfolio value over 90 days.

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

Waste Management  vs.  SAXLUND GROUP AB

Waste Management

Risk-Adjusted Performance

0 of 100

Modest

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

SAXLUND GROUP AB

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days SAXLUND GROUP AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, SAXLUND GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waste Management and SAXLUND GROUP

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

The idea behind Waste Management and SAXLUND GROUP 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.