Correlation Between Svenska Handelsbanken and SECITS Holding
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and SECITS Holding 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 SECITS Holding 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 SECITS Holding AB, you can compare the effects of market volatilities on Svenska Handelsbanken and SECITS Holding 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 SECITS Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and SECITS Holding.
Diversification Opportunities for Svenska Handelsbanken and SECITS Holding
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Svenska and SECITS is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and SECITS Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECITS Holding 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 SECITS Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECITS Holding AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and SECITS Holding go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and SECITS Holding
Assuming the 90 days trading horizon Svenska Handelsbanken is expected to generate 10.82 times less return on investment than SECITS Holding. But when comparing it to its historical volatility, Svenska Handelsbanken AB is 18.4 times less risky than SECITS Holding. It trades about 0.12 of its potential returns per unit of risk. SECITS Holding AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.00 in SECITS Holding AB on September 1, 2024 and sell it today you would earn a total of 0.04 from holding SECITS Holding AB or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken AB vs. SECITS Holding AB
Performance |
| Timeline |
| Svenska Handelsbanken |
| SECITS Holding AB |
Svenska Handelsbanken and SECITS Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and SECITS Holding
The main advantage of trading using opposite Svenska Handelsbanken and SECITS Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, SECITS Holding 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 SECITS Holding will offset losses from the drop in SECITS Holding'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 |
| SECITS Holding vs. DevPort AB | SECITS Holding vs. B3 Consulting Group | SECITS Holding vs. Micro Systemation 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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