Correlation Between Scandinavian Medical and Kreditbanken
Can any of the company-specific risk be diversified away by investing in both Scandinavian Medical and Kreditbanken 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 Scandinavian Medical and Kreditbanken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Medical Solutions and Kreditbanken AS, you can compare the effects of market volatilities on Scandinavian Medical and Kreditbanken 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 Scandinavian Medical with a short position of Kreditbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Medical and Kreditbanken.
Diversification Opportunities for Scandinavian Medical and Kreditbanken
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scandinavian and Kreditbanken is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Medical Solutions and Kreditbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kreditbanken AS and Scandinavian Medical 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 Scandinavian Medical Solutions are associated (or correlated) with Kreditbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kreditbanken AS has no effect on the direction of Scandinavian Medical i.e., Scandinavian Medical and Kreditbanken go up and down completely randomly.
Pair Corralation between Scandinavian Medical and Kreditbanken
Assuming the 90 days trading horizon Scandinavian Medical Solutions is expected to generate 3.0 times more return on investment than Kreditbanken. However, Scandinavian Medical is 3.0 times more volatile than Kreditbanken AS. It trades about 0.11 of its potential returns per unit of risk. Kreditbanken AS is currently generating about -0.04 per unit of risk. If you would invest 600.00 in Scandinavian Medical Solutions on August 29, 2024 and sell it today you would earn a total of 46.00 from holding Scandinavian Medical Solutions or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Medical Solutions vs. Kreditbanken AS
Performance |
| Timeline |
| Scandinavian Medical |
| Kreditbanken AS |
Scandinavian Medical and Kreditbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Medical and Kreditbanken
The main advantage of trading using opposite Scandinavian Medical and Kreditbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Medical position performs unexpectedly, Kreditbanken 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 Kreditbanken will offset losses from the drop in Kreditbanken's long position.| Scandinavian Medical vs. MapsPeople AS | Scandinavian Medical vs. Penneo AS | Scandinavian Medical vs. Dataproces Group AS | Scandinavian Medical vs. Orderyoyo AS |
| Kreditbanken vs. Dataproces Group AS | Kreditbanken vs. cBrain AS | Kreditbanken vs. ALK Abell AS | Kreditbanken vs. ChemoMetec AS |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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