Correlation Between Svenska Handelsbanken and Embellence Group
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Embellence Group 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 Svenska Handelsbanken and Embellence Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Svenska Handelsbanken AB and Embellence Group AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Embellence Group 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 Svenska Handelsbanken with a short position of Embellence Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Embellence Group.
Diversification Opportunities for Svenska Handelsbanken and Embellence Group
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Svenska and Embellence is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Embellence Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embellence Group and Svenska Handelsbanken 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 Svenska Handelsbanken AB are associated (or correlated) with Embellence Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embellence Group has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Embellence Group go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Embellence Group
Assuming the 90 days trading horizon Svenska Handelsbanken is expected to generate 2.2 times less return on investment than Embellence Group. But when comparing it to its historical volatility, Svenska Handelsbanken AB is 1.42 times less risky than Embellence Group. It trades about 0.03 of its potential returns per unit of risk. Embellence Group AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,958 in Embellence Group AB on August 27, 2024 and sell it today you would earn a total of 1,052 from holding Embellence Group AB or generate 53.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken AB vs. Embellence Group AB
Performance |
| Timeline |
| Svenska Handelsbanken |
| Embellence Group |
Svenska Handelsbanken and Embellence Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Embellence Group
The main advantage of trading using opposite Svenska Handelsbanken and Embellence Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Embellence Group 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 Embellence Group will offset losses from the drop in Embellence Group's long position.| Svenska Handelsbanken vs. Swedbank AB | Svenska Handelsbanken vs. Nordea Bank Abp | Svenska Handelsbanken vs. Tele2 AB | Svenska Handelsbanken vs. Telia Company AB |
| Embellence Group vs. AB Electrolux | Embellence Group vs. Husqvarna AB | Embellence Group vs. Essity AB | Embellence Group vs. Dometic 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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