Correlation Between Svenska Handelsbanken and Rottneros
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Rottneros 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 Rottneros 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 Rottneros AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Rottneros 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 Rottneros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Rottneros.
Diversification Opportunities for Svenska Handelsbanken and Rottneros
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Svenska and Rottneros is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Rottneros AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rottneros 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 Rottneros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rottneros AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Rottneros go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Rottneros
Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 0.92 times more return on investment than Rottneros. However, Svenska Handelsbanken AB is 1.09 times less risky than Rottneros. It trades about 0.08 of its potential returns per unit of risk. Rottneros AB is currently generating about -0.09 per unit of risk. If you would invest 9,554 in Svenska Handelsbanken AB on September 24, 2024 and sell it today you would earn a total of 1,651 from holding Svenska Handelsbanken AB or generate 17.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Svenska Handelsbanken AB vs. Rottneros AB
Performance |
Timeline |
Svenska Handelsbanken |
Rottneros AB |
Svenska Handelsbanken and Rottneros Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Svenska Handelsbanken and Rottneros
The main advantage of trading using opposite Svenska Handelsbanken and Rottneros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Rottneros 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 Rottneros will offset losses from the drop in Rottneros' long position.Svenska Handelsbanken vs. Swedbank AB | Svenska Handelsbanken vs. Tele2 AB | Svenska Handelsbanken vs. Telia Company AB | Svenska Handelsbanken vs. Investor AB ser |
Rottneros vs. BillerudKorsnas AB | Rottneros vs. SSAB AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Axfood AB |
Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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