Correlation Between Telia Company and SSAB AB

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

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

Diversification Opportunities for Telia Company and SSAB AB

-0.4

Correlation Coefficient

Telia Company  SSAB AB

Very good diversification

The 3 months correlation between Telia and SSAB is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB and SSAB AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSAB AB ser and Telia Company 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 Telia Company AB are associated (or correlated) with SSAB AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSAB AB ser has no effect on the direction of Telia Company i.e., Telia Company and SSAB AB go up and down completely randomly.

Pair Corralation between Telia Company and SSAB AB

Assuming the 90 days trading horizon Telia Company AB is expected to under-perform the SSAB AB. But the stock apears to be less risky and, when comparing its historical volatility, Telia Company AB is 2.02 times less risky than SSAB AB. The stock trades about -0.08 of its potential returns per unit of risk. The SSAB AB ser is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  397.00  in SSAB AB ser on September 12, 2024 and sell it today you would earn a total of  44.00  from holding SSAB AB ser or generate 11.08% return on investment over 90 days.

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

Telia Company AB  vs.  SSAB AB ser

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 somewhat strong essential indicators, Telia Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SSAB AB ser

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SSAB AB ser are ranked lower than 6 (%) 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.

Pair Trading with Telia Company and SSAB AB

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

The idea behind Telia Company AB and SSAB AB ser 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.