Correlation Between Agricultural Bank and Svenska Handelsbanken
Can any of the company-specific risk be diversified away by investing in both Agricultural Bank 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 Agricultural Bank and Svenska Handelsbanken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agricultural Bank and Svenska Handelsbanken AB, you can compare the effects of market volatilities on Agricultural Bank 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 Agricultural Bank with a short position of Svenska Handelsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agricultural Bank and Svenska Handelsbanken.
Diversification Opportunities for Agricultural Bank and Svenska Handelsbanken
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Agricultural and Svenska is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Agricultural Bank and Svenska Handelsbanken AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Handelsbanken and Agricultural 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 Agricultural Bank 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 Agricultural Bank i.e., Agricultural Bank and Svenska Handelsbanken go up and down completely randomly.
Pair Corralation between Agricultural Bank and Svenska Handelsbanken
Assuming the 90 days horizon Agricultural Bank is expected to generate 1.92 times more return on investment than Svenska Handelsbanken. However, Agricultural Bank is 1.92 times more volatile than Svenska Handelsbanken AB. It trades about 0.02 of its potential returns per unit of risk. Svenska Handelsbanken AB is currently generating about -0.06 per unit of risk. If you would invest 47.00 in Agricultural Bank on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Agricultural Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agricultural Bank vs. Svenska Handelsbanken AB
Performance |
| Timeline |
| Agricultural Bank |
| Svenska Handelsbanken |
Agricultural Bank and Svenska Handelsbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agricultural Bank and Svenska Handelsbanken
The main advantage of trading using opposite Agricultural Bank and Svenska Handelsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agricultural Bank 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.| Agricultural Bank vs. China Construction Bank | Agricultural Bank vs. National Australia Bank | Agricultural Bank vs. Svenska Handelsbanken AB | Agricultural Bank vs. Bank of America |
| Svenska Handelsbanken vs. Agricultural Bank | Svenska Handelsbanken vs. China Construction Bank | Svenska Handelsbanken vs. National Australia Bank | Svenska Handelsbanken vs. Bank of America |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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