Correlation Between SBB-D and Volati AB

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

By analyzing existing cross correlation between Samhaellsbyggnadsbolaget i Norden and Volati AB, you can compare the effects of market volatilities on SBB-D and Volati 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 SBB-D with a short position of Volati AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBB-D and Volati AB.

Diversification Opportunities for SBB-D and Volati AB

-0.54

Correlation Coefficient

SBB-D  Volati AB

Excellent diversification

The 3 months correlation between SBB-D and Volati is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Samhaellsbyggnadsbolaget i Nor and Volati AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volati AB and SBB-D 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 Samhaellsbyggnadsbolaget i Norden are associated (or correlated) with Volati AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volati AB has no effect on the direction of SBB-D i.e., SBB-D and Volati AB go up and down completely randomly.

Pair Corralation between SBB-D and Volati AB

Assuming the 90 days trading horizon Samhaellsbyggnadsbolaget i Norden is expected to under-perform the Volati AB. In addition to that, SBB-D is 17.84 times more volatile than Volati AB. It trades about -0.13 of its total potential returns per unit of risk. Volati AB is currently generating about 0.07 per unit of volatility. If you would invest  61,813  in Volati AB on September 15, 2024 and sell it today you would earn a total of  787.00  from holding Volati AB or generate 1.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Samhaellsbyggnadsbolaget i Nor  vs.  Volati AB

Samhaellsbyggnadsbol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samhaellsbyggnadsbolaget i Norden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Volati AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Volati AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Volati AB is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SBB-D and Volati AB

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

The idea behind Samhaellsbyggnadsbolaget i Norden and Volati 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.