Correlation Between W5 Solutions and Saab AB

Can any of the company-specific risk be diversified away by investing in both W5 Solutions and Saab 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 W5 Solutions and Saab AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between W5 Solutions AB and Saab AB, you can compare the effects of market volatilities on W5 Solutions and Saab 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 W5 Solutions with a short position of Saab AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of W5 Solutions and Saab AB.

Diversification Opportunities for W5 Solutions and Saab AB

-0.56

Correlation Coefficient

W5 Solutions  Saab AB

Excellent diversification

The 3 months correlation between W5 Solutions and Saab is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding W5 Solutions AB and Saab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saab AB and W5 Solutions 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 W5 Solutions AB are associated (or correlated) with Saab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saab AB has no effect on the direction of W5 Solutions i.e., W5 Solutions and Saab AB go up and down completely randomly.

Pair Corralation between W5 Solutions and Saab AB

Assuming the 90 days horizon W5 Solutions AB is expected to under-perform the Saab AB. In addition to that, W5 Solutions is 1.61 times more volatile than Saab AB. It trades about 0.0 of its total potential returns per unit of risk. Saab AB is currently generating about 0.09 per unit of volatility. If you would invest  9,830  in Saab AB on September 2, 2024 and sell it today you would earn a total of  14,055  from holding Saab AB or generate 142.98% return on investment over 90 days.

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

W5 Solutions AB  vs.  Saab AB

W5 Solutions AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days W5 Solutions AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Saab AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Saab AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Saab AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with W5 Solutions and Saab AB

The main advantage of trading using opposite W5 Solutions and Saab AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if W5 Solutions position performs unexpectedly, Saab 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 Saab AB will offset losses from the drop in Saab AB's long position.

The idea behind W5 Solutions AB and Saab 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.