Correlation Between Skandinaviska Enskilda and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and Nexam Chemical 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 Skandinaviska Enskilda and Nexam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skandinaviska Enskilda Banken and Nexam Chemical Holding, you can compare the effects of market volatilities on Skandinaviska Enskilda and Nexam Chemical 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 Skandinaviska Enskilda with a short position of Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and Nexam Chemical.
Diversification Opportunities for Skandinaviska Enskilda and Nexam Chemical
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skandinaviska and Nexam is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding and Skandinaviska Enskilda 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 Skandinaviska Enskilda Banken are associated (or correlated) with Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Nexam Chemical go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and Nexam Chemical
Assuming the 90 days trading horizon Skandinaviska Enskilda is expected to generate 1.6 times less return on investment than Nexam Chemical. But when comparing it to its historical volatility, Skandinaviska Enskilda Banken is 2.79 times less risky than Nexam Chemical. It trades about 0.06 of its potential returns per unit of risk. Nexam Chemical Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 337.00 in Nexam Chemical Holding on August 26, 2024 and sell it today you would earn a total of 82.00 from holding Nexam Chemical Holding or generate 24.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. Nexam Chemical Holding
Performance |
| Timeline |
| Skandinaviska Enskilda |
| Nexam Chemical Holding |
Skandinaviska Enskilda and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and Nexam Chemical
The main advantage of trading using opposite Skandinaviska Enskilda and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.| Skandinaviska Enskilda vs. Swedbank AB | Skandinaviska Enskilda vs. Svenska Handelsbanken AB | Skandinaviska Enskilda vs. H M Hennes | Skandinaviska Enskilda vs. Telefonaktiebolaget LM Ericsson |
| Nexam Chemical vs. Svenska Aerogel Holding | Nexam Chemical vs. Kancera AB | Nexam Chemical vs. BIMobject AB | Nexam Chemical vs. KABE Group AB |
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.
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