Correlation Between SinterCast and Candles Scandinavia

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

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

Diversification Opportunities for SinterCast and Candles Scandinavia

0.84

Correlation Coefficient

SinterCast  Candles Scandinavia

Very poor diversification

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

Pair Corralation between SinterCast and Candles Scandinavia

Assuming the 90 days trading horizon SinterCast AB is expected to under-perform the Candles Scandinavia. But the stock apears to be less risky and, when comparing its historical volatility, SinterCast AB is 3.59 times less risky than Candles Scandinavia. The stock trades about -0.01 of its potential returns per unit of risk. The Candles Scandinavia AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,200  in Candles Scandinavia AB on April 24, 2025 and sell it today you would earn a total of  150.00  from holding Candles Scandinavia AB or generate 4.69% return on investment over 90 days.

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

SinterCast AB  vs.  Candles Scandinavia AB

SinterCast AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SinterCast AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SinterCast unveiled solid returns over the last few months and may actually be approaching a breakup point.

Candles Scandinavia

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Candles Scandinavia AB are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Candles Scandinavia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SinterCast and Candles Scandinavia

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

The idea behind SinterCast AB and Candles Scandinavia 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.