Correlation Between Skandinaviska Enskilda and Botnia Exploration
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and Botnia Exploration 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 Botnia Exploration 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 Botnia Exploration Holding, you can compare the effects of market volatilities on Skandinaviska Enskilda and Botnia Exploration 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 Botnia Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and Botnia Exploration.
Diversification Opportunities for Skandinaviska Enskilda and Botnia Exploration
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Skandinaviska and Botnia is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and Botnia Exploration Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Botnia Exploration 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 Botnia Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Botnia Exploration has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Botnia Exploration go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and Botnia Exploration
Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to generate 0.49 times more return on investment than Botnia Exploration. However, Skandinaviska Enskilda Banken is 2.05 times less risky than Botnia Exploration. It trades about -0.06 of its potential returns per unit of risk. Botnia Exploration Holding is currently generating about -0.09 per unit of risk. If you would invest 15,600 in Skandinaviska Enskilda Banken on August 30, 2024 and sell it today you would lose (580.00) from holding Skandinaviska Enskilda Banken or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. Botnia Exploration Holding
Performance |
| Timeline |
| Skandinaviska Enskilda |
| Botnia Exploration |
Skandinaviska Enskilda and Botnia Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and Botnia Exploration
The main advantage of trading using opposite Skandinaviska Enskilda and Botnia Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, Botnia Exploration 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 Botnia Exploration will offset losses from the drop in Botnia Exploration's long position.| Skandinaviska Enskilda vs. Havsfrun Investment AB | Skandinaviska Enskilda vs. Scandic Hotels Group | Skandinaviska Enskilda vs. Nitro Games Oyj | Skandinaviska Enskilda vs. Corline Biomedical AB |
| Botnia Exploration vs. aXichem AB | Botnia Exploration vs. BE Group AB | Botnia Exploration vs. Arctic Gold Publ |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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