Correlation Between FormPipe Software and Swedbank

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

By analyzing existing cross correlation between FormPipe Software AB and Swedbank AB, you can compare the effects of market volatilities on FormPipe Software and Swedbank 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 FormPipe Software with a short position of Swedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of FormPipe Software and Swedbank.

Diversification Opportunities for FormPipe Software and Swedbank

-0.3

Correlation Coefficient

FormPipe Software  Swedbank

Very good diversification

The 3 months correlation between FormPipe and Swedbank is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding FormPipe Software AB and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank AB and FormPipe Software 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 FormPipe Software AB are associated (or correlated) with Swedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank AB has no effect on the direction of FormPipe Software i.e., FormPipe Software and Swedbank go up and down completely randomly.

Pair Corralation between FormPipe Software and Swedbank

Assuming the 90 days trading horizon FormPipe Software AB is expected to generate 4.74 times more return on investment than Swedbank. However, FormPipe Software is 4.74 times more volatile than Swedbank AB. It trades about 0.09 of its potential returns per unit of risk. Swedbank AB is currently generating about 0.12 per unit of risk. If you would invest  2,460  in FormPipe Software AB on October 9, 2024 and sell it today you would earn a total of  110.00  from holding FormPipe Software AB or generate 4.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FormPipe Software AB  vs.  Swedbank AB

FormPipe Software

Risk-Adjusted Performance

0 of 100

Very Weak

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

Swedbank AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Swedbank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FormPipe Software and Swedbank

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

The idea behind FormPipe Software AB and Swedbank AB 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.