Correlation Between Svenska Handelsbanken and AroCell AB

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

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

Diversification Opportunities for Svenska Handelsbanken and AroCell AB

-0.53

Correlation Coefficient

Svenska Handelsbanken  AroCell AB

Excellent diversification

The 3 months correlation between Svenska and AroCell is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and AroCell AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AroCell AB and Svenska Handelsbanken 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 Svenska Handelsbanken AB are associated (or correlated) with AroCell AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AroCell AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and AroCell AB go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and AroCell AB

Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 0.43 times more return on investment than AroCell AB. However, Svenska Handelsbanken AB is 2.33 times less risky than AroCell AB. It trades about 0.03 of its potential returns per unit of risk. AroCell AB is currently generating about -0.01 per unit of risk. If you would invest  9,798  in Svenska Handelsbanken AB on August 31, 2024 and sell it today you would earn a total of  1,582  from holding Svenska Handelsbanken AB or generate 16.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Svenska Handelsbanken AB  vs.  AroCell AB

Svenska Handelsbanken

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Handelsbanken AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Svenska Handelsbanken may actually be approaching a critical reversion point that can send shares even higher in December 2024.

AroCell AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AroCell AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Svenska Handelsbanken and AroCell AB

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

The idea behind Svenska Handelsbanken AB and AroCell 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.