Correlation Between Skandinaviska Enskilda and Bio Works
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and Bio Works 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 Bio Works 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 Bio Works Technologies AB, you can compare the effects of market volatilities on Skandinaviska Enskilda and Bio Works 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 Bio Works. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and Bio Works.
Diversification Opportunities for Skandinaviska Enskilda and Bio Works
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skandinaviska and Bio is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and Bio Works Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Works Technologies 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 Bio Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Works Technologies has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Bio Works go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and Bio Works
Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to under-perform the Bio Works. But the stock apears to be less risky and, when comparing its historical volatility, Skandinaviska Enskilda Banken is 4.43 times less risky than Bio Works. The stock trades about -0.1 of its potential returns per unit of risk. The Bio Works Technologies AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 83.00 in Bio Works Technologies AB on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Bio Works Technologies AB or generate 1.2% 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. Bio Works Technologies AB
Performance |
| Timeline |
| Skandinaviska Enskilda |
| Bio Works Technologies |
Skandinaviska Enskilda and Bio Works Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and Bio Works
The main advantage of trading using opposite Skandinaviska Enskilda and Bio Works positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, Bio Works 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 Bio Works will offset losses from the drop in Bio Works' long position.| Skandinaviska Enskilda vs. SaltX Technology Holding | Skandinaviska Enskilda vs. Investment AB Oresund | Skandinaviska Enskilda vs. Raketech Group Holding | Skandinaviska Enskilda vs. JLT Mobile Computers |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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