Correlation Between Svenska Handelsbanken and Agricultural Bank
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Agricultural Bank 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 Agricultural Bank 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 Agricultural Bank, you can compare the effects of market volatilities on Svenska Handelsbanken and Agricultural Bank 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 Agricultural Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Agricultural Bank.
Diversification Opportunities for Svenska Handelsbanken and Agricultural Bank
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Svenska and Agricultural is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Agricultural Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank 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 Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Agricultural Bank go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Agricultural Bank
Assuming the 90 days horizon Svenska Handelsbanken is expected to generate 2.68 times less return on investment than Agricultural Bank. But when comparing it to its historical volatility, Svenska Handelsbanken AB is 1.69 times less risky than Agricultural Bank. It trades about 0.01 of its potential returns per unit of risk. Agricultural Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 47.00 in Agricultural Bank on August 23, 2024 and sell it today you would earn a total of 0.00 from holding Agricultural Bank or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken AB vs. Agricultural Bank
Performance |
| Timeline |
| Svenska Handelsbanken |
| Agricultural Bank |
Svenska Handelsbanken and Agricultural Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Agricultural Bank
The main advantage of trading using opposite Svenska Handelsbanken and Agricultural Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Agricultural Bank 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 Agricultural Bank will offset losses from the drop in Agricultural Bank's long position.| Svenska Handelsbanken vs. Svenska Handelsbanken PK | Svenska Handelsbanken vs. ANZ Group Holdings | Svenska Handelsbanken vs. Westpac Banking | Svenska Handelsbanken vs. National Australia Bank |
| Agricultural Bank vs. China Construction Bank | Agricultural Bank vs. National Australia Bank | Agricultural Bank vs. Svenska Handelsbanken AB | Agricultural Bank vs. Bank of America |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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