Correlation Between Svenska Handelsbanken and Ferronordic
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Ferronordic 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 Ferronordic 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 Ferronordic AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Ferronordic 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 Ferronordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Ferronordic.
Diversification Opportunities for Svenska Handelsbanken and Ferronordic
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Svenska and Ferronordic is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Ferronordic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferronordic AB 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 Ferronordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferronordic AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Ferronordic go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Ferronordic
Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 0.79 times more return on investment than Ferronordic. However, Svenska Handelsbanken AB is 1.26 times less risky than Ferronordic. It trades about 0.13 of its potential returns per unit of risk. Ferronordic AB is currently generating about -0.03 per unit of risk. If you would invest 10,445 in Svenska Handelsbanken AB on September 12, 2024 and sell it today you would earn a total of 1,215 from holding Svenska Handelsbanken AB or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken AB vs. Ferronordic AB
Performance |
| Timeline |
| Svenska Handelsbanken |
| Ferronordic AB |
Svenska Handelsbanken and Ferronordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Ferronordic
The main advantage of trading using opposite Svenska Handelsbanken and Ferronordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Ferronordic 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 Ferronordic will offset losses from the drop in Ferronordic'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 |
| Ferronordic vs. 24SevenOffice Scandinavia AB | Ferronordic vs. High Coast Distillery | Ferronordic vs. Nexam Chemical Holding | Ferronordic vs. Nitro Games Oyj |
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 Stocks Directory module to find actively traded stocks across global markets.
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