Correlation Between Husqvarna and Sweco AB

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

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

Diversification Opportunities for Husqvarna and Sweco AB

-0.52

Correlation Coefficient

Husqvarna  Sweco AB

Excellent diversification

The 3 months correlation between Husqvarna and Sweco is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna AB and Sweco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweco AB and Husqvarna 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 Husqvarna AB are associated (or correlated) with Sweco AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweco AB has no effect on the direction of Husqvarna i.e., Husqvarna and Sweco AB go up and down completely randomly.

Pair Corralation between Husqvarna and Sweco AB

Assuming the 90 days trading horizon Husqvarna AB is expected to generate 0.97 times more return on investment than Sweco AB. However, Husqvarna AB is 1.03 times less risky than Sweco AB. It trades about 0.19 of its potential returns per unit of risk. Sweco AB is currently generating about -0.1 per unit of risk. If you would invest  4,449  in Husqvarna AB on April 25, 2025 and sell it today you would earn a total of  1,031  from holding Husqvarna AB or generate 23.17% return on investment over 90 days.

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

Husqvarna AB  vs.  Sweco AB

Husqvarna AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Husqvarna AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Husqvarna sustained solid returns over the last few months and may actually be approaching a breakup point.

Sweco AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sweco AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Husqvarna and Sweco AB

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

The idea behind Husqvarna AB and Sweco 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.