Correlation Between Svenska Handelsbanken and Intrum Justitia

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

Diversification Opportunities for Svenska Handelsbanken and Intrum Justitia

0.19

Correlation Coefficient

Svenska Handelsbanken  Intrum Justitia

Average diversification

The 3 months correlation between Svenska and Intrum is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Intrum Justitia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrum Justitia 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 Intrum Justitia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrum Justitia AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Intrum Justitia go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and Intrum Justitia

Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 0.66 times more return on investment than Intrum Justitia. However, Svenska Handelsbanken AB is 1.51 times less risky than Intrum Justitia. It trades about 0.14 of its potential returns per unit of risk. Intrum Justitia AB is currently generating about 0.01 per unit of risk. If you would invest  13,660  in Svenska Handelsbanken AB on December 29, 2024 and sell it today you would earn a total of  2,700  from holding Svenska Handelsbanken AB or generate 19.77% return on investment over 90 days.

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

Svenska Handelsbanken AB  vs.  Intrum Justitia 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 11 (%) 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.

Intrum Justitia AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intrum Justitia AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Intrum Justitia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Svenska Handelsbanken and Intrum Justitia

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

The idea behind Svenska Handelsbanken AB and Intrum Justitia 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.