Correlation Between Smart Eye and Generic Sweden

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

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

Diversification Opportunities for Smart Eye and Generic Sweden

0.02

Correlation Coefficient

Smart Eye  Generic Sweden

Significant diversification

The 3 months correlation between Smart and Generic is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Smart Eye AB and Generic Sweden publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Sweden publ and Smart Eye 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 Smart Eye AB are associated (or correlated) with Generic Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Sweden publ has no effect on the direction of Smart Eye i.e., Smart Eye and Generic Sweden go up and down completely randomly.

Pair Corralation between Smart Eye and Generic Sweden

Assuming the 90 days trading horizon Smart Eye AB is expected to generate 1.67 times more return on investment than Generic Sweden. However, Smart Eye is 1.67 times more volatile than Generic Sweden publ. It trades about 0.09 of its potential returns per unit of risk. Generic Sweden publ is currently generating about 0.02 per unit of risk. If you would invest  5,715  in Smart Eye AB on April 25, 2025 and sell it today you would earn a total of  935.00  from holding Smart Eye AB or generate 16.36% return on investment over 90 days.

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

Smart Eye AB  vs.  Generic Sweden publ

Smart Eye AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Eye AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Smart Eye unveiled solid returns over the last few months and may actually be approaching a breakup point.

Generic Sweden publ

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Generic Sweden publ are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Generic Sweden is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Smart Eye and Generic Sweden

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

The idea behind Smart Eye AB and Generic Sweden publ 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.