Correlation Between Svenska Handelsbanken and Creades AB

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

Diversification Opportunities for Svenska Handelsbanken and Creades AB

0.58

Correlation Coefficient

Svenska Handelsbanken  Creades AB

Very weak diversification

The 3 months correlation between Svenska and Creades is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Creades AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creades 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 Creades AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creades AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Creades AB go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and Creades AB

Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to under-perform the Creades AB. But the stock apears to be less risky and, when comparing its historical volatility, Svenska Handelsbanken AB is 1.38 times less risky than Creades AB. The stock trades about -0.25 of its potential returns per unit of risk. The Creades AB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  8,005  in Creades AB on December 30, 2024 and sell it today you would lose (30.00) from holding Creades AB or give up 0.37% of portfolio value over 90 days.

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

Svenska Handelsbanken AB  vs.  Creades AB

Svenska Handelsbanken

Risk-Adjusted Performance

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 April 2025.

Creades AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Creades AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Creades AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Svenska Handelsbanken and Creades AB

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

The idea behind Svenska Handelsbanken AB and Creades 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.