Correlation Between AB Sagax and Ratos AB

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

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

Diversification Opportunities for AB Sagax and Ratos AB

0.82

Correlation Coefficient

AB Sagax  Ratos AB

Very poor diversification

The 3 months correlation between SAGA-B and Ratos is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AB Sagax and Ratos AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratos AB and AB Sagax 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 AB Sagax are associated (or correlated) with Ratos AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratos AB has no effect on the direction of AB Sagax i.e., AB Sagax and Ratos AB go up and down completely randomly.

Pair Corralation between AB Sagax and Ratos AB

Assuming the 90 days trading horizon AB Sagax is expected to under-perform the Ratos AB. In addition to that, AB Sagax is 1.1 times more volatile than Ratos AB. It trades about -0.13 of its total potential returns per unit of risk. Ratos AB is currently generating about -0.07 per unit of volatility. If you would invest  3,442  in Ratos AB on September 14, 2024 and sell it today you would lose (234.00) from holding Ratos AB or give up 6.8% of portfolio value over 90 days.

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

AB Sagax  vs.  Ratos AB

AB Sagax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AB Sagax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ratos AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratos AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with AB Sagax and Ratos AB

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

The idea behind AB Sagax and Ratos 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.