Correlation Between SFL and Investor

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

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

Diversification Opportunities for SFL and Investor

0.0

Correlation Coefficient

SFL  Investor

Pay attention - limited upside

The 3 months correlation between SFL and Investor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. and Investor AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB and SFL 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 SFL Corporation are associated (or correlated) with Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB has no effect on the direction of SFL i.e., SFL and Investor go up and down completely randomly.

Pair Corralation between SFL and Investor

If you would invest  1,292  in SFL Corporation on February 23, 2024 and sell it today you would earn a total of  135.00  from holding SFL Corporation or generate 10.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

SFL Corp.  vs.  Investor AB

SFL Corporation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SFL Corporation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady technical and fundamental indicators, SFL may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Investor AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investor AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SFL and Investor

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

The idea behind SFL Corporation and Investor 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.