Correlation Between Svenska Handelsbanken and Industrivarden

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

Diversification Opportunities for Svenska Handelsbanken and Industrivarden

0.94

Correlation Coefficient

Svenska Handelsbanken  Industrivarden

Almost no diversification

The 3 months correlation between Svenska and Industrivarden is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser 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 Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Industrivarden go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and Industrivarden

Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 0.9 times more return on investment than Industrivarden. However, Svenska Handelsbanken AB is 1.11 times less risky than Industrivarden. It trades about 0.3 of its potential returns per unit of risk. Industrivarden AB ser is currently generating about 0.19 per unit of risk. If you would invest  11,520  in Svenska Handelsbanken AB on December 2, 2024 and sell it today you would earn a total of  1,965  from holding Svenska Handelsbanken AB or generate 17.06% return on investment over 90 days.

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

Svenska Handelsbanken AB  vs.  Industrivarden AB ser

Svenska Handelsbanken

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Handelsbanken AB are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Svenska Handelsbanken unveiled solid returns over the last few months and may actually be approaching a breakup point.

Industrivarden AB ser

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrivarden AB ser are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Industrivarden may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Svenska Handelsbanken and Industrivarden

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

The idea behind Svenska Handelsbanken AB and Industrivarden AB ser 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.