Correlation Between Swedbank and ProstaLund

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

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

Diversification Opportunities for Swedbank and ProstaLund

-0.49

Correlation Coefficient

Swedbank  ProstaLund

Very good diversification

The 3 months correlation between Swedbank and ProstaLund is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and ProstaLund AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProstaLund 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 ProstaLund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProstaLund AB has no effect on the direction of Swedbank i.e., Swedbank and ProstaLund go up and down completely randomly.

Pair Corralation between Swedbank and ProstaLund

Assuming the 90 days trading horizon Swedbank AB is expected to generate 0.15 times more return on investment than ProstaLund. However, Swedbank AB is 6.51 times less risky than ProstaLund. It trades about 0.12 of its potential returns per unit of risk. ProstaLund AB is currently generating about -0.07 per unit of risk. If you would invest  22,080  in Swedbank AB on October 9, 2024 and sell it today you would earn a total of  350.00  from holding Swedbank AB or generate 1.59% 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.  ProstaLund AB

Swedbank AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Swedbank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ProstaLund AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProstaLund AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Swedbank and ProstaLund

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

The idea behind Swedbank AB and ProstaLund 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.

Check out your portfolio center.

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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.