Correlation Between AB Volvo and Sozap Publ

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

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

Diversification Opportunities for AB Volvo and Sozap Publ

-0.29

Correlation Coefficient

AB Volvo  Sozap Publ

Very good diversification

The 3 months correlation between VOLV-A and Sozap is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo and Sozap Publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sozap Publ AB and AB Volvo 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 AB Volvo are associated (or correlated) with Sozap Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sozap Publ AB has no effect on the direction of AB Volvo i.e., AB Volvo and Sozap Publ go up and down completely randomly.

Pair Corralation between AB Volvo and Sozap Publ

Assuming the 90 days trading horizon AB Volvo is expected to generate 21.01 times less return on investment than Sozap Publ. But when comparing it to its historical volatility, AB Volvo is 11.18 times less risky than Sozap Publ. It trades about 0.04 of its potential returns per unit of risk. Sozap Publ AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Sozap Publ AB on April 22, 2025 and sell it today you would earn a total of  4.00  from holding Sozap Publ AB or generate 9.09% return on investment over 90 days.

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

AB Volvo  vs.  Sozap Publ AB

AB Volvo

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AB Volvo are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, AB Volvo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sozap Publ AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sozap Publ AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sozap Publ unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AB Volvo and Sozap Publ

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

The idea behind AB Volvo and Sozap Publ 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.