Correlation Between Catena AB and AB Sagax

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

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

Diversification Opportunities for Catena AB and AB Sagax

0.84

Correlation Coefficient

Catena AB  AB Sagax

Very poor diversification

The 3 months correlation between Catena and SAGA-D is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Catena AB and AB Sagax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Sagax and Catena AB 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 Catena AB are associated (or correlated) with AB Sagax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Sagax has no effect on the direction of Catena AB i.e., Catena AB and AB Sagax go up and down completely randomly.

Pair Corralation between Catena AB and AB Sagax

Assuming the 90 days trading horizon Catena AB is expected to generate 1.86 times more return on investment than AB Sagax. However, Catena AB is 1.86 times more volatile than AB Sagax. It trades about 0.09 of its potential returns per unit of risk. AB Sagax is currently generating about 0.1 per unit of risk. If you would invest  44,105  in Catena AB on April 23, 2025 and sell it today you would earn a total of  2,935  from holding Catena AB or generate 6.65% return on investment over 90 days.

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

Catena AB  vs.  AB Sagax

Catena AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Catena AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Catena AB may actually be approaching a critical reversion point that can send shares even higher in August 2025.

AB Sagax

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AB Sagax are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, AB Sagax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catena AB and AB Sagax

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

The idea behind Catena AB and AB Sagax 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .