Correlation Between Axcella Health and Svenska Kullager

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

Diversification Opportunities for Axcella Health and Svenska Kullager

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Axcella and Svenska is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Axcella Health and Svenska Kullager B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Kullager B and Axcella Health 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 Axcella Health are associated (or correlated) with Svenska Kullager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Kullager B has no effect on the direction of Axcella Health i.e., Axcella Health and Svenska Kullager go up and down completely randomly.

Pair Corralation between Axcella Health and Svenska Kullager

Given the investment horizon of 90 days Axcella Health is expected to under-perform the Svenska Kullager. In addition to that, Axcella Health is 2.59 times more volatile than Svenska Kullager B. It trades about -0.15 of its total potential returns per unit of risk. Svenska Kullager B is currently generating about 0.17 per unit of volatility. If you would invest  1,448  in Svenska Kullager B on September 1, 2022 and sell it today you would earn a total of  143.00  from holding Svenska Kullager B or generate 9.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Axcella Health  vs.  Svenska Kullager B

 Performance (%) 
       Timeline  
Axcella Health 
Axcella Performance
0 of 100
Over the last 90 days Axcella Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Axcella Price Channel

Svenska Kullager B 
Svenska Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Kullager B are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Svenska Kullager may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Svenska Price Channel

Axcella Health and Svenska Kullager Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Axcella Health and Svenska Kullager

The main advantage of trading using opposite Axcella Health and Svenska Kullager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axcella Health position performs unexpectedly, Svenska Kullager 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 Svenska Kullager will offset losses from the drop in Svenska Kullager's long position.
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The idea behind Axcella Health and Svenska Kullager B 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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