Correlation Between Swedbank and Systemair

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

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

Diversification Opportunities for Swedbank and Systemair

0.29

Correlation Coefficient

Swedbank  Systemair

Modest diversification

The 3 months correlation between Swedbank and Systemair is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair 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 Systemair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systemair AB has no effect on the direction of Swedbank i.e., Swedbank and Systemair go up and down completely randomly.

Pair Corralation between Swedbank and Systemair

Assuming the 90 days trading horizon Swedbank is expected to generate 1.37 times less return on investment than Systemair. But when comparing it to its historical volatility, Swedbank AB is 1.59 times less risky than Systemair. It trades about 0.07 of its potential returns per unit of risk. Systemair AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,091  in Systemair AB on September 15, 2024 and sell it today you would earn a total of  2,489  from holding Systemair AB or generate 35.1% return on investment over 90 days.

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

Swedbank AB  vs.  Systemair AB

Swedbank AB

Risk-Adjusted Performance

1 of 100

Weak

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

Systemair AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Systemair AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Systemair unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Swedbank and Systemair

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

The idea behind Swedbank AB and Systemair 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.