Correlation Between SinterCast and Vestum AB

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

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

Diversification Opportunities for SinterCast and Vestum AB

-0.38

Correlation Coefficient

SinterCast  Vestum AB

Very good diversification

The 3 months correlation between SinterCast and Vestum is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding SinterCast AB and Vestum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestum AB 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 Vestum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestum AB has no effect on the direction of SinterCast i.e., SinterCast and Vestum AB go up and down completely randomly.

Pair Corralation between SinterCast and Vestum AB

Assuming the 90 days trading horizon SinterCast AB is expected to generate 0.55 times more return on investment than Vestum AB. However, SinterCast AB is 1.83 times less risky than Vestum AB. It trades about 0.19 of its potential returns per unit of risk. Vestum AB is currently generating about -0.03 per unit of risk. If you would invest  10,076  in SinterCast AB on April 23, 2025 and sell it today you would earn a total of  1,724  from holding SinterCast AB or generate 17.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

SinterCast AB  vs.  Vestum 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 15 (%) 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.

Vestum AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vestum AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vestum AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SinterCast and Vestum AB

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

The idea behind SinterCast AB and Vestum 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.