Correlation Between Nordea Bank and Seche Environnement

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

By analyzing existing cross correlation between Nordea Bank Abp and Seche Environnement SA, you can compare the effects of market volatilities on Nordea Bank and Seche Environnement 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 Nordea Bank with a short position of Seche Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Seche Environnement.

Diversification Opportunities for Nordea Bank and Seche Environnement

0.39

Correlation Coefficient

Nordea Bank  Seche Environnement

Weak diversification

The 3 months correlation between Nordea and Seche is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Seche Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seche Environnement and Nordea Bank 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 Nordea Bank Abp are associated (or correlated) with Seche Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seche Environnement has no effect on the direction of Nordea Bank i.e., Nordea Bank and Seche Environnement go up and down completely randomly.

Pair Corralation between Nordea Bank and Seche Environnement

Assuming the 90 days trading horizon Nordea Bank Abp is expected to generate 0.57 times more return on investment than Seche Environnement. However, Nordea Bank Abp is 1.75 times less risky than Seche Environnement. It trades about 0.13 of its potential returns per unit of risk. Seche Environnement SA is currently generating about 0.04 per unit of risk. If you would invest  11,793  in Nordea Bank Abp on December 22, 2024 and sell it today you would earn a total of  1,335  from holding Nordea Bank Abp or generate 11.32% return on investment over 90 days.

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

Nordea Bank Abp  vs.  Seche Environnement SA

Nordea Bank Abp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Bank Abp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Nordea Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Seche Environnement

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seche Environnement SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Seche Environnement is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nordea Bank and Seche Environnement

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

The idea behind Nordea Bank Abp and Seche Environnement SA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.