Correlation Between Svenska Handelsbanken and Firefly AB
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Firefly AB 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 Firefly AB 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 Firefly AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Firefly AB 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 Firefly AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Firefly AB.
Diversification Opportunities for Svenska Handelsbanken and Firefly AB
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Svenska and Firefly is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Firefly AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firefly 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 Firefly AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firefly AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Firefly AB go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Firefly AB
Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 0.54 times more return on investment than Firefly AB. However, Svenska Handelsbanken AB is 1.85 times less risky than Firefly AB. It trades about 0.06 of its potential returns per unit of risk. Firefly AB is currently generating about 0.02 per unit of risk. If you would invest 13,865 in Svenska Handelsbanken AB on November 3, 2024 and sell it today you would earn a total of 2,755 from holding Svenska Handelsbanken AB or generate 19.87% 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. Firefly AB
Performance |
| Timeline |
| Svenska Handelsbanken |
| Firefly AB |
Svenska Handelsbanken and Firefly AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Firefly AB
The main advantage of trading using opposite Svenska Handelsbanken and Firefly AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Firefly AB 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 Firefly AB will offset losses from the drop in Firefly AB's long position.| Svenska Handelsbanken vs. Svenska Handelsbanken AB | Svenska Handelsbanken vs. Nordea Bank Abp | Svenska Handelsbanken vs. Atlas Copco AB | Svenska Handelsbanken vs. Skandinaviska Enskilda Banken |
| Firefly AB vs. Nordea Bank Abp | Firefly AB vs. AcadeMedia AB | Firefly AB vs. Norion Bank | Firefly AB vs. SaveLend 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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