Correlation Between Stenocare and Sectra AB

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

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

Diversification Opportunities for Stenocare and Sectra AB

0.81

Correlation Coefficient

Stenocare  Sectra AB

Very poor diversification

The 3 months correlation between Stenocare and Sectra is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Stenocare AS and Sectra AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sectra AB and Stenocare 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 Stenocare AS are associated (or correlated) with Sectra AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sectra AB has no effect on the direction of Stenocare i.e., Stenocare and Sectra AB go up and down completely randomly.

Pair Corralation between Stenocare and Sectra AB

Assuming the 90 days trading horizon Stenocare AS is expected to generate 3.67 times more return on investment than Sectra AB. However, Stenocare is 3.67 times more volatile than Sectra AB. It trades about 0.22 of its potential returns per unit of risk. Sectra AB is currently generating about 0.25 per unit of risk. If you would invest  31.00  in Stenocare AS on April 24, 2025 and sell it today you would earn a total of  35.00  from holding Stenocare AS or generate 112.9% return on investment over 90 days.

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

Stenocare AS  vs.  Sectra AB

Stenocare AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stenocare AS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Stenocare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sectra AB

Risk-Adjusted Performance

Solid

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

Pair Trading with Stenocare and Sectra AB

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

The idea behind Stenocare AS and Sectra 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.