Correlation Between Induction Healthcare and SEB SA
Can any of the company-specific risk be diversified away by investing in both Induction Healthcare and SEB SA 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 Induction Healthcare and SEB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Induction Healthcare Group and SEB SA, you can compare the effects of market volatilities on Induction Healthcare and SEB SA 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 Induction Healthcare with a short position of SEB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and SEB SA.
Diversification Opportunities for Induction Healthcare and SEB SA
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Induction and SEB is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB SA and Induction Healthcare 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 Induction Healthcare Group are associated (or correlated) with SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Induction Healthcare i.e., Induction Healthcare and SEB SA go up and down completely randomly.
Pair Corralation between Induction Healthcare and SEB SA
Assuming the 90 days trading horizon Induction Healthcare Group is expected to under-perform the SEB SA. In addition to that, Induction Healthcare is 2.18 times more volatile than SEB SA. It trades about -0.03 of its total potential returns per unit of risk. SEB SA is currently generating about 0.02 per unit of volatility. If you would invest 7,759 in SEB SA on September 4, 2024 and sell it today you would earn a total of 1,044 from holding SEB SA or generate 13.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Induction Healthcare Group vs. SEB SA
Performance |
| Timeline |
| Induction Healthcare |
| SEB SA |
Induction Healthcare and SEB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Induction Healthcare and SEB SA
The main advantage of trading using opposite Induction Healthcare and SEB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Induction Healthcare position performs unexpectedly, SEB SA 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 SEB SA will offset losses from the drop in SEB SA's long position.| Induction Healthcare vs. Samsung Electronics Co | Induction Healthcare vs. Samsung Electronics Co | Induction Healthcare vs. Hyundai Motor | Induction Healthcare vs. Toyota Motor Corp |
| SEB SA vs. Samsung Electronics Co | SEB SA vs. Samsung Electronics Co | SEB SA vs. Hyundai Motor | SEB SA vs. Toyota Motor Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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