Correlation Between Skandinaviska Enskilda and Viva Wine

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

Diversification Opportunities for Skandinaviska Enskilda and Viva Wine

0.72

Correlation Coefficient

Skandinaviska Enskilda  Viva Wine

Poor diversification

The 3 months correlation between Skandinaviska and Viva is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and Viva Wine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viva Wine Group 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 Viva Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viva Wine Group has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Viva Wine go up and down completely randomly.

Pair Corralation between Skandinaviska Enskilda and Viva Wine

Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to generate 0.87 times more return on investment than Viva Wine. However, Skandinaviska Enskilda Banken is 1.15 times less risky than Viva Wine. It trades about 0.2 of its potential returns per unit of risk. Viva Wine Group is currently generating about 0.09 per unit of risk. If you would invest  15,140  in Skandinaviska Enskilda Banken on December 24, 2024 and sell it today you would earn a total of  2,440  from holding Skandinaviska Enskilda Banken or generate 16.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Skandinaviska Enskilda Banken  vs.  Viva Wine Group

Skandinaviska Enskilda

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Skandinaviska Enskilda Banken are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Skandinaviska Enskilda unveiled solid returns over the last few months and may actually be approaching a breakup point.

Viva Wine Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Viva Wine Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Viva Wine may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Skandinaviska Enskilda and Viva Wine

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

The idea behind Skandinaviska Enskilda Banken and Viva Wine Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.