Correlation Between SSAB AB and Embracer Group

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

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

Diversification Opportunities for SSAB AB and Embracer Group

0.46

Correlation Coefficient

SSAB AB  Embracer Group

Very weak diversification

The 3 months correlation between SSAB and Embracer is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB and Embracer Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embracer Group AB and SSAB 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 SSAB AB are associated (or correlated) with Embracer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embracer Group AB has no effect on the direction of SSAB AB i.e., SSAB AB and Embracer Group go up and down completely randomly.

Pair Corralation between SSAB AB and Embracer Group

Assuming the 90 days trading horizon SSAB AB is expected to generate 2.22 times less return on investment than Embracer Group. But when comparing it to its historical volatility, SSAB AB is 1.44 times less risky than Embracer Group. It trades about 0.1 of its potential returns per unit of risk. Embracer Group AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,372  in Embracer Group AB on September 12, 2024 and sell it today you would earn a total of  732.00  from holding Embracer Group AB or generate 30.86% return on investment over 90 days.

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

SSAB AB  vs.  Embracer Group AB

SSAB AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SSAB AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, SSAB AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Embracer Group AB

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embracer Group AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Embracer Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SSAB AB and Embracer Group

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

The idea behind SSAB AB and Embracer 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..