Correlation Between Swedbank and BE Group

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

By analyzing existing cross correlation between Swedbank AB and BE Group AB, you can compare the effects of market volatilities on Swedbank and BE 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 Swedbank with a short position of BE Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and BE Group.

Diversification Opportunities for Swedbank and BE Group

-0.16

Correlation Coefficient

Swedbank  BE Group

Good diversification

The 3 months correlation between Swedbank and BEGR is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and BE Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Group AB and Swedbank 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 Swedbank AB are associated (or correlated) with BE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Group AB has no effect on the direction of Swedbank i.e., Swedbank and BE Group go up and down completely randomly.

Pair Corralation between Swedbank and BE Group

Assuming the 90 days trading horizon Swedbank AB is expected to generate 0.48 times more return on investment than BE Group. However, Swedbank AB is 2.07 times less risky than BE Group. It trades about 0.19 of its potential returns per unit of risk. BE Group AB is currently generating about -0.01 per unit of risk. If you would invest  19,977  in Swedbank AB on December 30, 2024 and sell it today you would earn a total of  3,213  from holding Swedbank AB or generate 16.08% return on investment over 90 days.

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

Swedbank AB  vs.  BE Group AB

Swedbank AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Swedbank sustained solid returns over the last few months and may actually be approaching a breakup point.

BE Group AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days BE Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BE Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Swedbank and BE Group

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

The idea behind Swedbank AB and BE Group 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.