Correlation Between Investment and Svenska Handelsbanken

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

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

Diversification Opportunities for Investment and Svenska Handelsbanken

-0.48

Correlation Coefficient

Investment  Svenska Handelsbanken

Very good diversification

The 3 months correlation between Investment and Svenska is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Oresund and Svenska Handelsbanken AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Handelsbanken and Investment 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 Investment AB Oresund 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 Investment i.e., Investment and Svenska Handelsbanken go up and down completely randomly.

Pair Corralation between Investment and Svenska Handelsbanken

Assuming the 90 days trading horizon Investment AB Oresund is expected to under-perform the Svenska Handelsbanken. In addition to that, Investment is 1.53 times more volatile than Svenska Handelsbanken AB. It trades about -0.05 of its total potential returns per unit of risk. Svenska Handelsbanken AB is currently generating about 0.22 per unit of volatility. If you would invest  14,980  in Svenska Handelsbanken AB on October 11, 2024 and sell it today you would earn a total of  500.00  from holding Svenska Handelsbanken AB or generate 3.34% return on investment over 90 days.

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

Investment AB Oresund  vs.  Svenska Handelsbanken AB

Investment AB Oresund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Svenska Handelsbanken

Risk-Adjusted Performance

19 of 100

Solid

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

Pair Trading with Investment and Svenska Handelsbanken

The main advantage of trading using opposite Investment and Svenska Handelsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment 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 Investment AB Oresund and Svenska Handelsbanken 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.