Correlation Between Synsam AB and High Coast

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

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

Diversification Opportunities for Synsam AB and High Coast

-0.49

Correlation Coefficient

Synsam AB  High Coast

Very good diversification

The 3 months correlation between Synsam and High is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Synsam AB and High Coast Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Coast Distillery and Synsam 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 Synsam AB are associated (or correlated) with High Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Coast Distillery has no effect on the direction of Synsam AB i.e., Synsam AB and High Coast go up and down completely randomly.

Pair Corralation between Synsam AB and High Coast

Assuming the 90 days trading horizon Synsam AB is expected to under-perform the High Coast. But the stock apears to be less risky and, when comparing its historical volatility, Synsam AB is 1.37 times less risky than High Coast. The stock trades about -0.15 of its potential returns per unit of risk. The High Coast Distillery is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  4,440  in High Coast Distillery on September 5, 2024 and sell it today you would lose (40.00) from holding High Coast Distillery or give up 0.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Synsam AB  vs.  High Coast Distillery

Synsam AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synsam 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.

High Coast Distillery

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Synsam AB and High Coast

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

The idea behind Synsam AB and High Coast Distillery 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.