Correlation Between Svenska Handelsbanken and Bergman Beving

Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Bergman Beving 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 Bergman Beving 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 Bergman Beving AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Bergman Beving 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 Bergman Beving. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Bergman Beving.

Diversification Opportunities for Svenska Handelsbanken and Bergman Beving

-0.37

Correlation Coefficient

Svenska Handelsbanken  Bergman Beving

Very good diversification

The 3 months correlation between Svenska and Bergman is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Bergman Beving AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergman Beving 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 Bergman Beving. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergman Beving AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Bergman Beving go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and Bergman Beving

Assuming the 90 days trading horizon Svenska Handelsbanken is expected to generate 53.75 times less return on investment than Bergman Beving. But when comparing it to its historical volatility, Svenska Handelsbanken AB is 2.82 times less risky than Bergman Beving. It trades about 0.01 of its potential returns per unit of risk. Bergman Beving AB is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  27,350  in Bergman Beving AB on September 29, 2024 and sell it today you would earn a total of  3,200  from holding Bergman Beving AB or generate 11.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Svenska Handelsbanken AB  vs.  Bergman Beving AB

Svenska Handelsbanken

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Handelsbanken AB are ranked lower than 8 (%) 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 January 2025.

Bergman Beving AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bergman Beving AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bergman Beving is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Svenska Handelsbanken and Bergman Beving

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

The idea behind Svenska Handelsbanken AB and Bergman Beving 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.