Correlation Between UBS Group and Svenska Handelsbanken

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

By analyzing existing cross correlation between UBS Group AG and Svenska Handelsbanken PK, you can compare the effects of market volatilities on UBS Group and Svenska Handelsbanken 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 UBS Group with a short position of Svenska Handelsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and Svenska Handelsbanken.

Diversification Opportunities for UBS Group and Svenska Handelsbanken

0.47

Correlation Coefficient

UBS Group  Svenska Handelsbanken

Very weak diversification

The 3 months correlation between UBS and Svenska is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG and Svenska Handelsbanken PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Handelsbanken and UBS Group 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 UBS Group AG are associated (or correlated) with Svenska Handelsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Handelsbanken has no effect on the direction of UBS Group i.e., UBS Group and Svenska Handelsbanken go up and down completely randomly.

Pair Corralation between UBS Group and Svenska Handelsbanken

Considering the 90-day investment horizon UBS Group is expected to generate 2.67 times less return on investment than Svenska Handelsbanken. In addition to that, UBS Group is 1.4 times more volatile than Svenska Handelsbanken PK. It trades about 0.07 of its total potential returns per unit of risk. Svenska Handelsbanken PK is currently generating about 0.26 per unit of volatility. If you would invest  520.00  in Svenska Handelsbanken PK on December 1, 2024 and sell it today you would earn a total of  102.00  from holding Svenska Handelsbanken PK or generate 19.62% return on investment over 90 days.

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

UBS Group AG  vs.  Svenska Handelsbanken PK

UBS Group AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, UBS Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Svenska Handelsbanken

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Handelsbanken PK are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Svenska Handelsbanken showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UBS Group and Svenska Handelsbanken

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

The idea behind UBS Group AG and Svenska Handelsbanken PK 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.