Correlation Between Skandinaviska Enskilda and High Coast

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

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

Diversification Opportunities for Skandinaviska Enskilda and High Coast

0.19

Correlation Coefficient

Skandinaviska Enskilda  High Coast

Average diversification

The 3 months correlation between Skandinaviska and High is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and High Coast Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Coast Distillery and Skandinaviska Enskilda 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 Skandinaviska Enskilda Banken are associated (or correlated) with High Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Coast Distillery has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and High Coast go up and down completely randomly.

Pair Corralation between Skandinaviska Enskilda and High Coast

Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to generate 0.33 times more return on investment than High Coast. However, Skandinaviska Enskilda Banken is 3.0 times less risky than High Coast. It trades about 0.06 of its potential returns per unit of risk. High Coast Distillery is currently generating about 0.01 per unit of risk. If you would invest  15,160  in Skandinaviska Enskilda Banken on October 10, 2024 and sell it today you would earn a total of  640.00  from holding Skandinaviska Enskilda Banken or generate 4.22% return on investment over 90 days.

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

Skandinaviska Enskilda Banken  vs.  High Coast Distillery

Skandinaviska Enskilda

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Skandinaviska Enskilda Banken are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Skandinaviska Enskilda is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

High Coast Distillery

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days High Coast Distillery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, High Coast is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Skandinaviska Enskilda and High Coast

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

The idea behind Skandinaviska Enskilda Banken and High Coast Distillery 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.