Correlation Between Svenska Handelsbanken and Episurf Medical

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

Diversification Opportunities for Svenska Handelsbanken and Episurf Medical

-0.44

Correlation Coefficient

Svenska Handelsbanken  Episurf Medical

Very good diversification

The 3 months correlation between Svenska and Episurf is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Episurf Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Episurf Medical 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 Episurf Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Episurf Medical AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Episurf Medical go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and Episurf Medical

Assuming the 90 days trading horizon Svenska Handelsbanken is expected to generate 1.15 times less return on investment than Episurf Medical. But when comparing it to its historical volatility, Svenska Handelsbanken AB is 2.6 times less risky than Episurf Medical. It trades about 0.17 of its potential returns per unit of risk. Episurf Medical AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Episurf Medical AB on December 24, 2024 and sell it today you would earn a total of  2.00  from holding Episurf Medical AB or generate 18.18% return on investment over 90 days.

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

Svenska Handelsbanken AB  vs.  Episurf Medical AB

Svenska Handelsbanken

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Handelsbanken AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Svenska Handelsbanken unveiled solid returns over the last few months and may actually be approaching a breakup point.

Episurf Medical AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Episurf Medical AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Episurf Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Svenska Handelsbanken and Episurf Medical

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

The idea behind Svenska Handelsbanken AB and Episurf Medical 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.