Correlation Between AB SKF and Swedish Stirling
Can any of the company-specific risk be diversified away by investing in both AB SKF and Swedish Stirling 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 AB SKF and Swedish Stirling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB SKF and Swedish Stirling AB, you can compare the effects of market volatilities on AB SKF and Swedish Stirling 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 AB SKF with a short position of Swedish Stirling. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB SKF and Swedish Stirling.
Diversification Opportunities for AB SKF and Swedish Stirling
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SKF-B and Swedish is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding AB SKF and Swedish Stirling AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Stirling and AB SKF 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 AB SKF are associated (or correlated) with Swedish Stirling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Stirling has no effect on the direction of AB SKF i.e., AB SKF and Swedish Stirling go up and down completely randomly.
Pair Corralation between AB SKF and Swedish Stirling
Assuming the 90 days trading horizon AB SKF is expected to generate 0.14 times more return on investment than Swedish Stirling. However, AB SKF is 7.29 times less risky than Swedish Stirling. It trades about -0.18 of its potential returns per unit of risk. Swedish Stirling AB is currently generating about -0.95 per unit of risk. If you would invest 23,440 in AB SKF on March 6, 2024 and sell it today you would lose (880.00) from holding AB SKF or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 30.0% |
| Values | Daily Returns |
AB SKF vs. Swedish Stirling AB
Performance |
| Timeline |
| AB SKF |
| Swedish Stirling |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
AB SKF and Swedish Stirling Volatility Contrast
Predicted Return Density |
| Returns |