Correlation Between Cloetta AB and Scandi Standard

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

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

Diversification Opportunities for Cloetta AB and Scandi Standard

-0.71

Correlation Coefficient

Cloetta AB  Scandi Standard

Pay attention - limited upside

The 3 months correlation between Cloetta and Scandi is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cloetta AB and Scandi Standard publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandi Standard publ and Cloetta 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 Cloetta AB are associated (or correlated) with Scandi Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandi Standard publ has no effect on the direction of Cloetta AB i.e., Cloetta AB and Scandi Standard go up and down completely randomly.

Pair Corralation between Cloetta AB and Scandi Standard

Assuming the 90 days trading horizon Cloetta AB is expected to generate 1.06 times less return on investment than Scandi Standard. But when comparing it to its historical volatility, Cloetta AB is 1.03 times less risky than Scandi Standard. It trades about 0.12 of its potential returns per unit of risk. Scandi Standard publ is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,519  in Scandi Standard publ on September 14, 2024 and sell it today you would earn a total of  2,931  from holding Scandi Standard publ or generate 53.11% return on investment over 90 days.

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

Cloetta AB  vs.  Scandi Standard publ

Cloetta AB

Risk-Adjusted Performance

7 of 100

OK

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

Scandi Standard publ

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cloetta AB and Scandi Standard

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

The idea behind Cloetta AB and Scandi Standard publ 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.