Correlation Between Swedbank and Zenicor Medical

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

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

Diversification Opportunities for Swedbank and Zenicor Medical

0.78

Correlation Coefficient

Swedbank  Zenicor Medical

Poor diversification

The 3 months correlation between Swedbank and Zenicor is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Zenicor Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zenicor Medical Systems 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 Zenicor Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zenicor Medical Systems has no effect on the direction of Swedbank i.e., Swedbank and Zenicor Medical go up and down completely randomly.

Pair Corralation between Swedbank and Zenicor Medical

Assuming the 90 days trading horizon Swedbank AB is expected to generate 0.38 times more return on investment than Zenicor Medical. However, Swedbank AB is 2.61 times less risky than Zenicor Medical. It trades about 0.26 of its potential returns per unit of risk. Zenicor Medical Systems is currently generating about 0.05 per unit of risk. If you would invest  21,760  in Swedbank AB on December 24, 2024 and sell it today you would earn a total of  4,230  from holding Swedbank AB or generate 19.44% return on investment over 90 days.

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

Swedbank AB  vs.  Zenicor Medical Systems

Swedbank AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Swedbank AB are ranked lower than 20 (%) 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.

Zenicor Medical Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zenicor Medical Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Zenicor Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Swedbank and Zenicor Medical

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

The idea behind Swedbank AB and Zenicor Medical Systems 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.