Correlation Between Svenska Handelsbanken and Guideline Geo

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Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Guideline Geo 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 Guideline Geo 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 Guideline Geo AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Guideline Geo 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 Guideline Geo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Guideline Geo.

Diversification Opportunities for Svenska Handelsbanken and Guideline Geo

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Svenska and Guideline is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Guideline Geo AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guideline Geo 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 Guideline Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guideline Geo AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Guideline Geo go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and Guideline Geo

Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 0.67 times more return on investment than Guideline Geo. However, Svenska Handelsbanken AB is 1.49 times less risky than Guideline Geo. It trades about -0.02 of its potential returns per unit of risk. Guideline Geo AB is currently generating about -0.11 per unit of risk. If you would invest  11,230  in Svenska Handelsbanken AB on August 30, 2024 and sell it today you would lose (50.00) from holding Svenska Handelsbanken AB or give up 0.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Svenska Handelsbanken AB  vs.  Guideline Geo AB

 Performance 
       Timeline  
Svenska Handelsbanken 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Svenska Handelsbanken AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Svenska Handelsbanken is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Guideline Geo AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Guideline Geo AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Svenska Handelsbanken and Guideline Geo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Svenska Handelsbanken and Guideline Geo

The main advantage of trading using opposite Svenska Handelsbanken and Guideline Geo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Guideline Geo 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 Guideline Geo will offset losses from the drop in Guideline Geo's long position.
The idea behind Svenska Handelsbanken AB and Guideline Geo AB 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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