Correlation Between Sectra AB and Dometic Group

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

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

Diversification Opportunities for Sectra AB and Dometic Group

-0.5

Correlation Coefficient

Sectra AB  Dometic Group

Very good diversification

The 3 months correlation between Sectra and Dometic is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sectra AB and Dometic Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dometic Group AB and Sectra 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 Sectra AB are associated (or correlated) with Dometic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dometic Group AB has no effect on the direction of Sectra AB i.e., Sectra AB and Dometic Group go up and down completely randomly.

Pair Corralation between Sectra AB and Dometic Group

Assuming the 90 days trading horizon Sectra AB is expected to generate 0.9 times more return on investment than Dometic Group. However, Sectra AB is 1.11 times less risky than Dometic Group. It trades about 0.17 of its potential returns per unit of risk. Dometic Group AB is currently generating about -0.07 per unit of risk. If you would invest  14,330  in Sectra AB on September 4, 2024 and sell it today you would earn a total of  14,715  from holding Sectra AB or generate 102.69% return on investment over 90 days.

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

Sectra AB  vs.  Dometic Group AB

Sectra AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sectra AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Sectra AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Dometic Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dometic Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary 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.

Pair Trading with Sectra AB and Dometic Group

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

The idea behind Sectra AB and Dometic 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.