Correlation Between Skandinaviska Enskilda and SaltX Technology

Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and SaltX Technology 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 SaltX Technology 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 SaltX Technology Holding, you can compare the effects of market volatilities on Skandinaviska Enskilda and SaltX Technology 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 SaltX Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and SaltX Technology.

Diversification Opportunities for Skandinaviska Enskilda and SaltX Technology

0.23

Correlation Coefficient

Skandinaviska Enskilda  SaltX Technology

Modest diversification

The 3 months correlation between Skandinaviska and SaltX is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and SaltX Technology Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SaltX Technology Holding 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 SaltX Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SaltX Technology Holding has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and SaltX Technology go up and down completely randomly.

Pair Corralation between Skandinaviska Enskilda and SaltX Technology

Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to generate 0.29 times more return on investment than SaltX Technology. However, Skandinaviska Enskilda Banken is 3.42 times less risky than SaltX Technology. It trades about 0.68 of its potential returns per unit of risk. SaltX Technology Holding is currently generating about 0.11 per unit of risk. If you would invest  15,140  in Skandinaviska Enskilda Banken on October 26, 2024 and sell it today you would earn a total of  1,820  from holding Skandinaviska Enskilda Banken or generate 12.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Skandinaviska Enskilda Banken  vs.  SaltX Technology Holding

Skandinaviska Enskilda

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Skandinaviska Enskilda Banken are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Skandinaviska Enskilda may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SaltX Technology Holding

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Skandinaviska Enskilda and SaltX Technology

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

The idea behind Skandinaviska Enskilda Banken and SaltX Technology Holding 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..