Correlation Between Skandinaviska Enskilda and C +
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and C + 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 C + 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 C F FINL, you can compare the effects of market volatilities on Skandinaviska Enskilda and C + 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 C +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and C +.
Diversification Opportunities for Skandinaviska Enskilda and C +
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Skandinaviska and CFF is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and C F FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C F FINL 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 C +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C F FINL has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and C + go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and C +
Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to under-perform the C +. But the stock apears to be less risky and, when comparing its historical volatility, Skandinaviska Enskilda Banken is 2.66 times less risky than C +. The stock trades about -0.02 of its potential returns per unit of risk. The C F FINL is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 5,500 in C F FINL on September 3, 2024 and sell it today you would earn a total of 1,150 from holding C F FINL or generate 20.91% 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. C F FINL
Performance |
| Timeline |
| Skandinaviska Enskilda |
| C F FINL |
Skandinaviska Enskilda and C + Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skandinaviska Enskilda and C +
The main advantage of trading using opposite Skandinaviska Enskilda and C + positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, C + 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 C + will offset losses from the drop in C +'s long position.| Skandinaviska Enskilda vs. WT OFFSHORE | Skandinaviska Enskilda vs. Chongqing Machinery Electric | Skandinaviska Enskilda vs. SOLSTAD OFFSHORE NK | Skandinaviska Enskilda vs. Nufarm Limited |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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