Correlation Between Svenska Handelsbanken and Swedencare Publ
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Swedencare Publ 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 Swedencare Publ 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 Swedencare publ AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Swedencare Publ 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 Swedencare Publ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Swedencare Publ.
Diversification Opportunities for Svenska Handelsbanken and Swedencare Publ
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Svenska and Swedencare is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Swedencare publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedencare publ 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 Swedencare Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedencare publ AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Swedencare Publ go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Swedencare Publ
Assuming the 90 days trading horizon Svenska Handelsbanken AB is expected to generate 0.56 times more return on investment than Swedencare Publ. However, Svenska Handelsbanken AB is 1.79 times less risky than Swedencare Publ. It trades about 0.1 of its potential returns per unit of risk. Swedencare publ AB is currently generating about -0.04 per unit of risk. If you would invest 12,310 in Svenska Handelsbanken AB on September 3, 2024 and sell it today you would earn a total of 2,260 from holding Svenska Handelsbanken AB or generate 18.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken AB vs. Swedencare publ AB
Performance |
| Timeline |
| Svenska Handelsbanken |
| Swedencare publ AB |
Svenska Handelsbanken and Swedencare Publ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Swedencare Publ
The main advantage of trading using opposite Svenska Handelsbanken and Swedencare Publ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Swedencare Publ 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 Swedencare Publ will offset losses from the drop in Swedencare Publ'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 |
| Swedencare Publ vs. Svenska Handelsbanken AB | Swedencare Publ vs. Soder Sportfiske AB | Swedencare Publ vs. Nexam Chemical Holding | Swedencare Publ 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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