Correlation Between Svenska Handelsbanken and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Sumitomo Mitsui 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 Sumitomo Mitsui 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 Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Svenska Handelsbanken and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Sumitomo Mitsui.
Diversification Opportunities for Svenska Handelsbanken and Sumitomo Mitsui
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Svenska and Sumitomo is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken PK and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Svenska Handelsbanken and Sumitomo Mitsui
Assuming the 90 days horizon Svenska Handelsbanken PK is expected to under-perform the Sumitomo Mitsui. But the pink sheet apears to be less risky and, when comparing its historical volatility, Svenska Handelsbanken PK is 4.63 times less risky than Sumitomo Mitsui. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Sumitomo Mitsui Financial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,048 in Sumitomo Mitsui Financial on August 28, 2024 and sell it today you would earn a total of 368.00 from holding Sumitomo Mitsui Financial or generate 17.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Svenska Handelsbanken PK vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Svenska Handelsbanken |
| Sumitomo Mitsui Financial |
Svenska Handelsbanken and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Svenska Handelsbanken and Sumitomo Mitsui
The main advantage of trading using opposite Svenska Handelsbanken and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Svenska Handelsbanken vs. China Construction Bank | Svenska Handelsbanken vs. Industrial and Commercial | Svenska Handelsbanken vs. Bank of America | Svenska Handelsbanken vs. Bank of America |
| Sumitomo Mitsui vs. ANZ Group Holdings | Sumitomo Mitsui vs. Agricultural Bank | Sumitomo Mitsui vs. Industrial and Commercial | Sumitomo Mitsui 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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