Correlation Between Swedbank and Creades AB

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

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

Diversification Opportunities for Swedbank and Creades AB

-0.42

Correlation Coefficient

Swedbank  Creades AB

Very good diversification

The 3 months correlation between Swedbank and Creades is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Creades AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creades 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 Creades AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creades AB has no effect on the direction of Swedbank i.e., Swedbank and Creades AB go up and down completely randomly.

Pair Corralation between Swedbank and Creades AB

Assuming the 90 days trading horizon Swedbank AB is expected to generate 0.72 times more return on investment than Creades AB. However, Swedbank AB is 1.39 times less risky than Creades AB. It trades about 0.04 of its potential returns per unit of risk. Creades AB is currently generating about 0.0 per unit of risk. If you would invest  16,683  in Swedbank AB on September 27, 2024 and sell it today you would earn a total of  4,887  from holding Swedbank AB or generate 29.29% return on investment over 90 days.

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

Swedbank AB  vs.  Creades AB

Swedbank AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swedbank AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Swedbank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Creades AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creades AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Swedbank and Creades AB

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

The idea behind Swedbank AB and Creades 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.