Correlation Between Svenska Handelsbanken and Karolinska Development
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Karolinska Development 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 Karolinska Development 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 Karolinska Development AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Karolinska Development 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 Karolinska Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Karolinska Development.
Diversification Opportunities for Svenska Handelsbanken and Karolinska Development
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Svenska and Karolinska is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Karolinska Development AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karolinska Development 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 Karolinska Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karolinska Development has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Karolinska Development go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Karolinska Development
Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 0.2 times more return on investment than Karolinska Development. However, Svenska Handelsbanken AB is 5.08 times less risky than Karolinska Development. It trades about -0.1 of its potential returns per unit of risk. Karolinska Development AB is currently generating about -0.14 per unit of risk. If you would invest 11,240 in Svenska Handelsbanken AB on August 29, 2024 and sell it today you would lose (205.00) from holding Svenska Handelsbanken AB or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken AB vs. Karolinska Development AB
Performance |
| Timeline |
| Svenska Handelsbanken |
| Karolinska Development |
Svenska Handelsbanken and Karolinska Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Karolinska Development
The main advantage of trading using opposite Svenska Handelsbanken and Karolinska Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Karolinska Development 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 Karolinska Development will offset losses from the drop in Karolinska Development'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 |
| Karolinska Development vs. Oncopeptides AB | Karolinska Development vs. Cantargia AB | Karolinska Development vs. BioInvent International AB | Karolinska Development vs. Moberg Pharma 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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