Correlation Between Volvo AB and Swedish Orphan

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Can any of the company-specific risk be diversified away by investing in both Volvo AB and Swedish Orphan 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 Volvo AB and Swedish Orphan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volvo AB Series and Swedish Orphan Biovitrum, you can compare the effects of market volatilities on Volvo AB and Swedish Orphan 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 Volvo AB with a short position of Swedish Orphan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volvo AB and Swedish Orphan.

Diversification Opportunities for Volvo AB and Swedish Orphan

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Volvo and Swedish is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Volvo AB Series and Swedish Orphan Biovitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Orphan Biovitrum and Volvo AB 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 Volvo AB Series are associated (or correlated) with Swedish Orphan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Orphan Biovitrum has no effect on the direction of Volvo AB i.e., Volvo AB and Swedish Orphan go up and down completely randomly.

Pair Corralation between Volvo AB and Swedish Orphan

Assuming the 90 days trading horizon Volvo AB Series is expected to generate 0.87 times more return on investment than Swedish Orphan. However, Volvo AB Series is 1.15 times less risky than Swedish Orphan. It trades about 0.09 of its potential returns per unit of risk. Swedish Orphan Biovitrum is currently generating about 0.0 per unit of risk. If you would invest  26,360  in Volvo AB Series on April 25, 2025 and sell it today you would earn a total of  2,300  from holding Volvo AB Series or generate 8.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Volvo AB Series  vs.  Swedish Orphan Biovitrum

 Performance 
       Timeline  
Volvo AB Series 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Volvo AB Series are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Volvo AB may actually be approaching a critical reversion point that can send shares even higher in August 2025.
Swedish Orphan Biovitrum 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Swedish Orphan Biovitrum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Swedish Orphan is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Volvo AB and Swedish Orphan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Volvo AB and Swedish Orphan

The main advantage of trading using opposite Volvo AB and Swedish Orphan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volvo AB position performs unexpectedly, Swedish Orphan 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 Swedish Orphan will offset losses from the drop in Swedish Orphan's long position.
The idea behind Volvo AB Series and Swedish Orphan Biovitrum 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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