Correlation Between Skandinaviska Enskilda and Diagonal Bio
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and Diagonal Bio 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 Diagonal Bio 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 Diagonal Bio AB, you can compare the effects of market volatilities on Skandinaviska Enskilda and Diagonal Bio 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 Diagonal Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and Diagonal Bio.
Diversification Opportunities for Skandinaviska Enskilda and Diagonal Bio
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Skandinaviska and Diagonal is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and Diagonal Bio AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diagonal Bio 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 Diagonal Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diagonal Bio AB has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Diagonal Bio go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and Diagonal Bio
Assuming the 90 days trading horizon Skandinaviska Enskilda is expected to generate 62.78 times less return on investment than Diagonal Bio. But when comparing it to its historical volatility, Skandinaviska Enskilda Banken is 11.56 times less risky than Diagonal Bio. It trades about 0.01 of its potential returns per unit of risk. Diagonal Bio AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.31 in Diagonal Bio AB on September 1, 2024 and sell it today you would lose (0.11) from holding Diagonal Bio AB or give up 3.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. Diagonal Bio AB
Performance |
| Timeline |
| Skandinaviska Enskilda |
| Diagonal Bio AB |
Skandinaviska Enskilda and Diagonal Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and Diagonal Bio
The main advantage of trading using opposite Skandinaviska Enskilda and Diagonal Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, Diagonal Bio 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 Diagonal Bio will offset losses from the drop in Diagonal Bio's long position.| Skandinaviska Enskilda vs. Svenska Handelsbanken AB | Skandinaviska Enskilda vs. Telia Company AB | Skandinaviska Enskilda vs. Tele2 AB | Skandinaviska Enskilda vs. H M Hennes |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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