Correlation Between Schlumberger and AB Electrolux

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

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

Diversification Opportunities for Schlumberger and AB Electrolux

0.0

Correlation Coefficient

Schlumberger  AB Electrolux

Pay attention - limited upside

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

Pair Corralation between Schlumberger and AB Electrolux

If you would invest (100.00) in AB Electrolux on January 25, 2024 and sell it today you would earn a total of  100.00  from holding AB Electrolux or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Schlumberger NV  vs.  AB Electrolux

Schlumberger NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schlumberger NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Schlumberger is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

AB Electrolux

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AB Electrolux has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AB Electrolux is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Schlumberger and AB Electrolux

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

The idea behind Schlumberger NV and AB Electrolux 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.