Correlation Between Svenska Handelsbanken and Know IT
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Know IT 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 Know IT 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 Know IT AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Know IT 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 Know IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Know IT.
Diversification Opportunities for Svenska Handelsbanken and Know IT
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Svenska and Know is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Know IT AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know IT 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 Know IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know IT AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Know IT go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Know IT
Assuming the 90 days trading horizon Svenska Handelsbanken is expected to generate 3.4 times less return on investment than Know IT. But when comparing it to its historical volatility, Svenska Handelsbanken AB is 1.75 times less risky than Know IT. It trades about 0.03 of its potential returns per unit of risk. Know IT AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 12,970 in Know IT AB on August 30, 2024 and sell it today you would earn a total of 190.00 from holding Know IT AB or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken AB vs. Know IT AB
Performance |
| Timeline |
| Svenska Handelsbanken |
| Know IT AB |
Svenska Handelsbanken and Know IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Know IT
The main advantage of trading using opposite Svenska Handelsbanken and Know IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Know IT 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 Know IT will offset losses from the drop in Know IT'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 |
| Know IT vs. Enea AB | Know IT vs. Lagercrantz Group AB | Know IT vs. Vitec Software Group | Know IT vs. Addnode 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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