Correlation Between MSAD Insurance and Svenska Handelsbanken

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

By analyzing existing cross correlation between MSAD Insurance Group and Svenska Handelsbanken PK, you can compare the effects of market volatilities on MSAD Insurance and Svenska Handelsbanken 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 MSAD Insurance with a short position of Svenska Handelsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSAD Insurance and Svenska Handelsbanken.

Diversification Opportunities for MSAD Insurance and Svenska Handelsbanken

-0.31

Correlation Coefficient

MSAD Insurance  Svenska Handelsbanken

Very good diversification

The 3 months correlation between MSAD and Svenska is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MSAD Insurance Group and Svenska Handelsbanken PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Handelsbanken and MSAD Insurance 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 MSAD Insurance Group are associated (or correlated) with Svenska Handelsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Handelsbanken has no effect on the direction of MSAD Insurance i.e., MSAD Insurance and Svenska Handelsbanken go up and down completely randomly.

Pair Corralation between MSAD Insurance and Svenska Handelsbanken

Assuming the 90 days horizon MSAD Insurance is expected to generate 3.45 times less return on investment than Svenska Handelsbanken. In addition to that, MSAD Insurance is 1.25 times more volatile than Svenska Handelsbanken PK. It trades about 0.0 of its total potential returns per unit of risk. Svenska Handelsbanken PK is currently generating about 0.02 per unit of volatility. If you would invest  507.00  in Svenska Handelsbanken PK on September 14, 2024 and sell it today you would earn a total of  4.00  from holding Svenska Handelsbanken PK or generate 0.79% return on investment over 90 days.

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

MSAD Insurance Group  vs.  Svenska Handelsbanken PK

MSAD Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MSAD Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, MSAD Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Svenska Handelsbanken

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Handelsbanken PK are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Svenska Handelsbanken is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MSAD Insurance and Svenska Handelsbanken

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

The idea behind MSAD Insurance Group and Svenska Handelsbanken PK 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.