Correlation Between Svenska Handelsbanken and UBS Group

Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and UBS Group 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 UBS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Svenska Handelsbanken PK and UBS Group AG, you can compare the effects of market volatilities on Svenska Handelsbanken and UBS Group 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 UBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and UBS Group.

Diversification Opportunities for Svenska Handelsbanken and UBS Group

0.37

Correlation Coefficient

Svenska Handelsbanken  UBS Group

Weak diversification

The 3 months correlation between Svenska and UBS is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken PK and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG 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 PK are associated (or correlated) with UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and UBS Group go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and UBS Group

Assuming the 90 days horizon Svenska Handelsbanken PK is expected to generate 0.66 times more return on investment than UBS Group. However, Svenska Handelsbanken PK is 1.52 times less risky than UBS Group. It trades about 0.29 of its potential returns per unit of risk. UBS Group AG is currently generating about 0.04 per unit of risk. If you would invest  514.00  in Svenska Handelsbanken PK on December 27, 2024 and sell it today you would earn a total of  138.00  from holding Svenska Handelsbanken PK or generate 26.85% return on investment over 90 days.

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

Svenska Handelsbanken PK  vs.  UBS Group AG

Svenska Handelsbanken

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Handelsbanken PK are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Svenska Handelsbanken showed solid returns over the last few months and may actually be approaching a breakup point.

UBS Group AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, UBS Group is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Svenska Handelsbanken and UBS Group

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

The idea behind Svenska Handelsbanken PK and UBS Group AG 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.