Correlation Between SVENSKA AEROGEL and CHIBA BANK

Can any of the company-specific risk be diversified away by investing in both SVENSKA AEROGEL and CHIBA BANK 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 SVENSKA AEROGEL and CHIBA BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SVENSKA AEROGEL HOLDING and CHIBA BANK, you can compare the effects of market volatilities on SVENSKA AEROGEL and CHIBA BANK 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 SVENSKA AEROGEL with a short position of CHIBA BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of SVENSKA AEROGEL and CHIBA BANK.

Diversification Opportunities for SVENSKA AEROGEL and CHIBA BANK

0.33

Correlation Coefficient

SVENSKA AEROGEL  CHIBA BANK

Weak diversification

The 3 months correlation between SVENSKA and CHIBA is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SVENSKA AEROGEL HOLDING and CHIBA BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIBA BANK and SVENSKA AEROGEL 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 SVENSKA AEROGEL HOLDING are associated (or correlated) with CHIBA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIBA BANK has no effect on the direction of SVENSKA AEROGEL i.e., SVENSKA AEROGEL and CHIBA BANK go up and down completely randomly.

Pair Corralation between SVENSKA AEROGEL and CHIBA BANK

Assuming the 90 days horizon SVENSKA AEROGEL HOLDING is expected to generate 119.57 times more return on investment than CHIBA BANK. However, SVENSKA AEROGEL is 119.57 times more volatile than CHIBA BANK. It trades about 0.39 of its potential returns per unit of risk. CHIBA BANK is currently generating about -0.01 per unit of risk. If you would invest  6.00  in SVENSKA AEROGEL HOLDING on September 22, 2024 and sell it today you would earn a total of  50.00  from holding SVENSKA AEROGEL HOLDING or generate 833.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.23%
Values	Daily Returns

SVENSKA AEROGEL HOLDING  vs.  CHIBA BANK

SVENSKA AEROGEL HOLDING

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SVENSKA AEROGEL HOLDING are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SVENSKA AEROGEL reported solid returns over the last few months and may actually be approaching a breakup point.

CHIBA BANK

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CHIBA BANK are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CHIBA BANK is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SVENSKA AEROGEL and CHIBA BANK

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

The idea behind SVENSKA AEROGEL HOLDING and CHIBA BANK 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.