Correlation Between TF Bank and Resurs Holding

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

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

Diversification Opportunities for TF Bank and Resurs Holding

0.29

Correlation Coefficient

TF Bank  Resurs Holding

Modest diversification

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

Pair Corralation between TF Bank and Resurs Holding

Assuming the 90 days trading horizon TF Bank AB is expected to generate 0.88 times more return on investment than Resurs Holding. However, TF Bank AB is 1.14 times less risky than Resurs Holding. It trades about 0.17 of its potential returns per unit of risk. Resurs Holding AB is currently generating about 0.1 per unit of risk. If you would invest  17,480  in TF Bank AB on October 22, 2024 and sell it today you would earn a total of  23,120  from holding TF Bank AB or generate 132.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

TF Bank AB  vs.  Resurs Holding AB

TF Bank AB

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TF Bank AB are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, TF Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Resurs Holding AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Resurs Holding AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Resurs Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TF Bank and Resurs Holding

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

The idea behind TF Bank AB and Resurs Holding 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.