Correlation Between AB Sagax and Heimstaden

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

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

Diversification Opportunities for AB Sagax and Heimstaden

-0.85

Correlation Coefficient

AB Sagax  Heimstaden

Pay attention - limited upside

The 3 months correlation between SAGA-D and Heimstaden is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding AB Sagax and Heimstaden AB Pfd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heimstaden AB Pfd and AB Sagax 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 Sagax are associated (or correlated) with Heimstaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heimstaden AB Pfd has no effect on the direction of AB Sagax i.e., AB Sagax and Heimstaden go up and down completely randomly.

Pair Corralation between AB Sagax and Heimstaden

Assuming the 90 days trading horizon AB Sagax is expected to generate 0.18 times more return on investment than Heimstaden. However, AB Sagax is 5.52 times less risky than Heimstaden. It trades about 0.24 of its potential returns per unit of risk. Heimstaden AB Pfd is currently generating about 0.02 per unit of risk. If you would invest  2,440  in AB Sagax on January 30, 2024 and sell it today you would earn a total of  575.00  from holding AB Sagax or generate 23.57% return on investment over 90 days.

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

AB Sagax  vs.  Heimstaden AB Pfd

AB Sagax

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AB Sagax are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, AB Sagax may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Heimstaden AB Pfd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heimstaden AB Pfd has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with AB Sagax and Heimstaden

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

The idea behind AB Sagax and Heimstaden AB Pfd 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.