Correlation Between Svenska Handelsbanken and Spago Nanomedical

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

Diversification Opportunities for Svenska Handelsbanken and Spago Nanomedical

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Svenska and Spago is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Spago Nanomedical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spago Nanomedical 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 Spago Nanomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spago Nanomedical has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Spago Nanomedical go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and Spago Nanomedical

Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 0.21 times more return on investment than Spago Nanomedical. However, Svenska Handelsbanken AB is 4.71 times less risky than Spago Nanomedical. It trades about 0.68 of its potential returns per unit of risk. Spago Nanomedical AB is currently generating about 0.1 per unit of risk. If you would invest  11,395  in Svenska Handelsbanken AB on October 25, 2024 and sell it today you would earn a total of  1,100  from holding Svenska Handelsbanken AB or generate 9.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy94.12%
ValuesDaily Returns

Svenska Handelsbanken AB  vs.  Spago Nanomedical AB

 Performance 
       Timeline  
Svenska Handelsbanken 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Handelsbanken AB are ranked lower than 16 (%) 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 February 2025.
Spago Nanomedical 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Spago Nanomedical AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Spago Nanomedical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Svenska Handelsbanken and Spago Nanomedical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Svenska Handelsbanken and Spago Nanomedical

The main advantage of trading using opposite Svenska Handelsbanken and Spago Nanomedical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Spago Nanomedical 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 Spago Nanomedical will offset losses from the drop in Spago Nanomedical's long position.
The idea behind Svenska Handelsbanken AB and Spago Nanomedical 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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