Correlation Between METALL ZUG and Skandinaviska Enskilda

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

By analyzing existing cross correlation between METALL ZUG AG and Skandinaviska Enskilda Banken, you can compare the effects of market volatilities on METALL ZUG and Skandinaviska Enskilda 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 METALL ZUG with a short position of Skandinaviska Enskilda. Check out your portfolio center. Please also check ongoing floating volatility patterns of METALL ZUG and Skandinaviska Enskilda.

Diversification Opportunities for METALL ZUG and Skandinaviska Enskilda

-0.63

Correlation Coefficient

METALL ZUG  Skandinaviska Enskilda

Excellent diversification

The 3 months correlation between METALL and Skandinaviska is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding METALL ZUG AG and Skandinaviska Enskilda Banken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skandinaviska Enskilda and METALL ZUG 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 METALL ZUG AG are associated (or correlated) with Skandinaviska Enskilda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skandinaviska Enskilda has no effect on the direction of METALL ZUG i.e., METALL ZUG and Skandinaviska Enskilda go up and down completely randomly.

Pair Corralation between METALL ZUG and Skandinaviska Enskilda

Assuming the 90 days trading horizon METALL ZUG AG is expected to under-perform the Skandinaviska Enskilda. In addition to that, METALL ZUG is 1.15 times more volatile than Skandinaviska Enskilda Banken. It trades about -0.06 of its total potential returns per unit of risk. Skandinaviska Enskilda Banken is currently generating about 0.24 per unit of volatility. If you would invest  15,360  in Skandinaviska Enskilda Banken on December 4, 2024 and sell it today you would earn a total of  2,720  from holding Skandinaviska Enskilda Banken or generate 17.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

METALL ZUG AG  vs.  Skandinaviska Enskilda Banken

METALL ZUG AG

Risk-Adjusted Performance

Very Weak

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

Skandinaviska Enskilda

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Skandinaviska Enskilda Banken are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Skandinaviska Enskilda unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with METALL ZUG and Skandinaviska Enskilda

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

The idea behind METALL ZUG AG and Skandinaviska Enskilda Banken 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.