Correlation Between Svenska Handelsbanken and Industrial
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Industrial 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 Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Svenska Handelsbanken PK and Industrial and Commercial, you can compare the effects of market volatilities on Svenska Handelsbanken and Industrial 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 Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Industrial.
Diversification Opportunities for Svenska Handelsbanken and Industrial
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Svenska and Industrial is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken PK and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial 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 PK are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Industrial go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Industrial
Assuming the 90 days horizon Svenska Handelsbanken PK is expected to under-perform the Industrial. But the pink sheet apears to be less risky and, when comparing its historical volatility, Svenska Handelsbanken PK is 1.62 times less risky than Industrial. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Industrial and Commercial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Industrial and Commercial on August 23, 2024 and sell it today you would earn a total of 4.00 from holding Industrial and Commercial or generate 7.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken PK vs. Industrial and Commercial
Performance |
| Timeline |
| Svenska Handelsbanken |
| Industrial and Commercial |
Svenska Handelsbanken and Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Industrial
The main advantage of trading using opposite Svenska Handelsbanken and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.| Svenska Handelsbanken vs. ANZ Group Holdings | Svenska Handelsbanken vs. Westpac Banking | Svenska Handelsbanken vs. National Australia Bank | Svenska Handelsbanken vs. Agricultural Bank |
| Industrial vs. Svenska Handelsbanken PK | Industrial vs. ANZ Group Holdings | Industrial vs. Westpac Banking | Industrial vs. National Australia Bank |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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