Correlation Between Svenska Handelsbanken and Precio Fishbone
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Precio Fishbone 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 Precio Fishbone 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 Precio Fishbone AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Precio Fishbone 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 Precio Fishbone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Precio Fishbone.
Diversification Opportunities for Svenska Handelsbanken and Precio Fishbone
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Svenska and Precio is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Precio Fishbone AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precio Fishbone 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 Precio Fishbone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precio Fishbone AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Precio Fishbone go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Precio Fishbone
Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 0.53 times more return on investment than Precio Fishbone. However, Svenska Handelsbanken AB is 1.88 times less risky than Precio Fishbone. It trades about 0.54 of its potential returns per unit of risk. Precio Fishbone AB is currently generating about 0.08 per unit of risk. If you would invest 16,550 in Svenska Handelsbanken AB on November 27, 2024 and sell it today you would earn a total of 2,720 from holding Svenska Handelsbanken AB or generate 16.44% 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. Precio Fishbone AB
Performance |
| Timeline |
| Svenska Handelsbanken |
| Precio Fishbone AB |
Svenska Handelsbanken and Precio Fishbone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Precio Fishbone
The main advantage of trading using opposite Svenska Handelsbanken and Precio Fishbone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Precio Fishbone 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 Precio Fishbone will offset losses from the drop in Precio Fishbone'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 |
| Precio Fishbone vs. Avensia publ AB | Precio Fishbone vs. Generic Sweden publ | Precio Fishbone vs. Novotek AB | Precio Fishbone vs. DevPort 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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