Correlation Between Skandinaviska Enskilda and Know IT
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and Know IT 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 Know IT 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 Know IT AB, you can compare the effects of market volatilities on Skandinaviska Enskilda and Know IT 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 Know IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and Know IT.
Diversification Opportunities for Skandinaviska Enskilda and Know IT
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skandinaviska and Know is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and Know IT AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know IT 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 Know IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know IT AB has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Know IT go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and Know IT
Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to generate 0.61 times more return on investment than Know IT. However, Skandinaviska Enskilda Banken is 1.64 times less risky than Know IT. It trades about 0.04 of its potential returns per unit of risk. Know IT AB is currently generating about -0.02 per unit of risk. If you would invest 11,603 in Skandinaviska Enskilda Banken on August 30, 2024 and sell it today you would earn a total of 3,417 from holding Skandinaviska Enskilda Banken or generate 29.45% 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. Know IT AB
Performance |
| Timeline |
| Skandinaviska Enskilda |
| Know IT AB |
Skandinaviska Enskilda and Know IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and Know IT
The main advantage of trading using opposite Skandinaviska Enskilda and Know IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, Know IT 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 Know IT will offset losses from the drop in Know IT's long position.| Skandinaviska Enskilda vs. Qleanair Holding AB | Skandinaviska Enskilda vs. AcadeMedia AB | Skandinaviska Enskilda vs. Catena Media plc | Skandinaviska Enskilda vs. Online Brands Nordic |
| Know IT vs. Enea AB | Know IT vs. Lagercrantz Group AB | Know IT vs. Vitec Software Group | Know IT vs. Addnode 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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