Correlation Between SSAB AB and Telia Company

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

By analyzing existing cross correlation between SSAB AB ser and Telia Company AB, you can compare the effects of market volatilities on SSAB AB and Telia Company 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 Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSAB AB and Telia Company.

Diversification Opportunities for SSAB AB and Telia Company

-0.28

Correlation Coefficient

SSAB AB  Telia Company

Very good diversification

The 3 months correlation between SSAB and Telia is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding SSAB AB ser and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company 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 ser are associated (or correlated) with Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of SSAB AB i.e., SSAB AB and Telia Company go up and down completely randomly.

Pair Corralation between SSAB AB and Telia Company

Assuming the 90 days trading horizon SSAB AB ser is expected to generate 2.21 times more return on investment than Telia Company. However, SSAB AB is 2.21 times more volatile than Telia Company AB. It trades about 0.06 of its potential returns per unit of risk. Telia Company AB is currently generating about -0.12 per unit of risk. If you would invest  412.00  in SSAB AB ser on September 14, 2024 and sell it today you would earn a total of  33.00  from holding SSAB AB ser or generate 8.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

SSAB AB ser  vs.  Telia Company AB

SSAB AB ser

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SSAB AB ser are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SSAB AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Telia Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telia Company AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential 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 SSAB AB and Telia Company

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

The idea behind SSAB AB ser and Telia Company 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.