Correlation Between Skandinaviska Enskilda and Skanska AB
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and Skanska 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 Skanska 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 Skanska AB, you can compare the effects of market volatilities on Skandinaviska Enskilda and Skanska 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 Skanska AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and Skanska AB.
Diversification Opportunities for Skandinaviska Enskilda and Skanska AB
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Skandinaviska and Skanska is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and Skanska AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skanska 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 Skanska AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skanska AB has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Skanska AB go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and Skanska AB
Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to under-perform the Skanska AB. But the stock apears to be less risky and, when comparing its historical volatility, Skandinaviska Enskilda Banken is 1.1 times less risky than Skanska AB. The stock trades about -0.1 of its potential returns per unit of risk. The Skanska AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 22,080 in Skanska AB on August 29, 2024 and sell it today you would earn a total of 30.00 from holding Skanska AB or generate 0.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skandinaviska Enskilda Banken vs. Skanska AB
Performance |
| Timeline |
| Skandinaviska Enskilda |
| Skanska AB |
Skandinaviska Enskilda and Skanska AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and Skanska AB
The main advantage of trading using opposite Skandinaviska Enskilda and Skanska AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, Skanska 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 Skanska AB will offset losses from the drop in Skanska AB'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 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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