Correlation Between Skandinaviska Enskilda and Paxman AB
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and Paxman AB 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 Paxman AB 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 Paxman AB, you can compare the effects of market volatilities on Skandinaviska Enskilda and Paxman AB 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 Paxman AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and Paxman AB.
Diversification Opportunities for Skandinaviska Enskilda and Paxman AB
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Skandinaviska and Paxman is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and Paxman AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paxman AB 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 Paxman AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paxman AB has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Paxman AB go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and Paxman AB
Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to under-perform the Paxman AB. But the stock apears to be less risky and, when comparing its historical volatility, Skandinaviska Enskilda Banken is 2.89 times less risky than Paxman AB. The stock trades about -0.04 of its potential returns per unit of risk. The Paxman AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,720 in Paxman AB on August 27, 2024 and sell it today you would earn a total of 280.00 from holding Paxman AB or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. Paxman AB
Performance |
| Timeline |
| Skandinaviska Enskilda |
| Paxman AB |
Skandinaviska Enskilda and Paxman AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and Paxman AB
The main advantage of trading using opposite Skandinaviska Enskilda and Paxman AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, Paxman AB 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 Paxman AB will offset losses from the drop in Paxman AB's long position.| Skandinaviska Enskilda vs. Skandinaviska Enskilda Banken | Skandinaviska Enskilda vs. Swedbank AB | Skandinaviska Enskilda vs. TF Bank 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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