Correlation Between Skandinaviska Enskilda and ROMERIKE SPAREBANK

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Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK NK, you can compare the effects of market volatilities on Skandinaviska Enskilda and ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and ROMERIKE SPAREBANK.

Diversification Opportunities for Skandinaviska Enskilda and ROMERIKE SPAREBANK

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Skandinaviska and ROMERIKE is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and ROMERIKE SPAREBANK NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROMERIKE SPAREBANK has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and ROMERIKE SPAREBANK go up and down completely randomly.

Pair Corralation between Skandinaviska Enskilda and ROMERIKE SPAREBANK

Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to under-perform the ROMERIKE SPAREBANK. In addition to that, Skandinaviska Enskilda is 1.59 times more volatile than ROMERIKE SPAREBANK NK. It trades about -0.14 of its total potential returns per unit of risk. ROMERIKE SPAREBANK NK is currently generating about 0.23 per unit of volatility. If you would invest  1,025  in ROMERIKE SPAREBANK NK on August 25, 2024 and sell it today you would earn a total of  51.00  from holding ROMERIKE SPAREBANK NK or generate 4.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Skandinaviska Enskilda Banken  vs.  ROMERIKE SPAREBANK NK

 Performance 
       Timeline  
Skandinaviska Enskilda 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Skandinaviska Enskilda Banken has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Skandinaviska Enskilda is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
ROMERIKE SPAREBANK 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ROMERIKE SPAREBANK NK are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ROMERIKE SPAREBANK is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Skandinaviska Enskilda and ROMERIKE SPAREBANK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Skandinaviska Enskilda and ROMERIKE SPAREBANK

The main advantage of trading using opposite Skandinaviska Enskilda and ROMERIKE SPAREBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK will offset losses from the drop in ROMERIKE SPAREBANK's long position.
The idea behind Skandinaviska Enskilda Banken and ROMERIKE SPAREBANK NK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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