Correlation Between Essity AB and Soder Sportfiske

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

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

Diversification Opportunities for Essity AB and Soder Sportfiske

-0.26

Correlation Coefficient

Essity AB  Soder Sportfiske

Very good diversification

The 3 months correlation between Essity and Soder is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Essity AB and Soder Sportfiske AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soder Sportfiske and Essity 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 Essity AB are associated (or correlated) with Soder Sportfiske. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soder Sportfiske has no effect on the direction of Essity AB i.e., Essity AB and Soder Sportfiske go up and down completely randomly.

Pair Corralation between Essity AB and Soder Sportfiske

Assuming the 90 days trading horizon Essity AB is expected to under-perform the Soder Sportfiske. But the stock apears to be less risky and, when comparing its historical volatility, Essity AB is 2.34 times less risky than Soder Sportfiske. The stock trades about -0.21 of its potential returns per unit of risk. The Soder Sportfiske AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,520  in Soder Sportfiske AB on April 22, 2025 and sell it today you would earn a total of  580.00  from holding Soder Sportfiske AB or generate 23.02% return on investment over 90 days.

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

Essity AB  vs.  Soder Sportfiske AB

Essity AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Essity AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Soder Sportfiske

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Soder Sportfiske AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Soder Sportfiske unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Essity AB and Soder Sportfiske

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

The idea behind Essity AB and Soder Sportfiske 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.