Correlation Between Sectra AB and Mycronic Publ

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

By analyzing existing cross correlation between Sectra AB and Mycronic publ AB, you can compare the effects of market volatilities on Sectra AB and Mycronic Publ 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 Mycronic Publ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sectra AB and Mycronic Publ.

Diversification Opportunities for Sectra AB and Mycronic Publ

0.53

Correlation Coefficient

Sectra AB  Mycronic Publ

Very weak diversification

The 3 months correlation between Sectra and Mycronic is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sectra AB and Mycronic publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mycronic publ 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 Mycronic Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mycronic publ AB has no effect on the direction of Sectra AB i.e., Sectra AB and Mycronic Publ go up and down completely randomly.

Pair Corralation between Sectra AB and Mycronic Publ

Assuming the 90 days trading horizon Sectra AB is expected to generate 0.72 times more return on investment than Mycronic Publ. However, Sectra AB is 1.38 times less risky than Mycronic Publ. It trades about 0.19 of its potential returns per unit of risk. Mycronic publ AB is currently generating about 0.04 per unit of risk. If you would invest  23,582  in Sectra AB on September 3, 2024 and sell it today you would earn a total of  4,888  from holding Sectra AB or generate 20.73% return on investment over 90 days.

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

Sectra AB  vs.  Mycronic publ AB

Sectra AB

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sectra AB are ranked lower than 14 (%) 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.

Mycronic publ AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mycronic publ AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mycronic Publ is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sectra AB and Mycronic Publ

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

The idea behind Sectra AB and Mycronic publ 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.