Correlation Between Svolder AB and L E

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

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

Diversification Opportunities for Svolder AB and L E

0.67

Correlation Coefficient

Svolder AB  L E

Poor diversification

The 3 months correlation between Svolder and LUND-B is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Svolder AB and L E Lundbergfretagen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L E Lundbergfretagen and Svolder 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 Svolder AB are associated (or correlated) with L E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L E Lundbergfretagen has no effect on the direction of Svolder AB i.e., Svolder AB and L E go up and down completely randomly.

Pair Corralation between Svolder AB and L E

Assuming the 90 days trading horizon Svolder AB is expected to under-perform the L E. In addition to that, Svolder AB is 1.4 times more volatile than L E Lundbergfretagen. It trades about -0.1 of its total potential returns per unit of risk. L E Lundbergfretagen is currently generating about -0.13 per unit of volatility. If you would invest  56,700  in L E Lundbergfretagen on August 31, 2024 and sell it today you would lose (4,500) from holding L E Lundbergfretagen or give up 7.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Svolder AB  vs.  L E Lundbergfretagen

Svolder AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Svolder AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

L E Lundbergfretagen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L E Lundbergfretagen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 Svolder AB and L E

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

The idea behind Svolder AB and L E Lundbergfretagen 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..