Correlation Between Swedbank and Redsense Medical
Can any of the company-specific risk be diversified away by investing in both Swedbank and Redsense Medical 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 Swedbank and Redsense Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedbank AB and Redsense Medical AB, you can compare the effects of market volatilities on Swedbank and Redsense Medical 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 Swedbank with a short position of Redsense Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedbank and Redsense Medical.
Diversification Opportunities for Swedbank and Redsense Medical
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Swedbank and Redsense is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Swedbank AB and Redsense Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redsense Medical and Swedbank 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 Swedbank AB are associated (or correlated) with Redsense Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redsense Medical has no effect on the direction of Swedbank i.e., Swedbank and Redsense Medical go up and down completely randomly.
Pair Corralation between Swedbank and Redsense Medical
Assuming the 90 days trading horizon Swedbank AB is expected to under-perform the Redsense Medical. But the stock apears to be less risky and, when comparing its historical volatility, Swedbank AB is 3.29 times less risky than Redsense Medical. The stock trades about -0.01 of its potential returns per unit of risk. The Redsense Medical AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 674.00 in Redsense Medical AB on August 29, 2024 and sell it today you would earn a total of 10.00 from holding Redsense Medical AB or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swedbank AB vs. Redsense Medical AB
Performance |
| Timeline |
| Swedbank AB |
| Redsense Medical |
Swedbank and Redsense Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedbank and Redsense Medical
The main advantage of trading using opposite Swedbank and Redsense Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedbank position performs unexpectedly, Redsense Medical 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 Redsense Medical will offset losses from the drop in Redsense Medical's long position.| Swedbank vs. Svenska Handelsbanken AB | Swedbank vs. Nordea Bank Abp | Swedbank vs. Telia Company AB | Swedbank vs. Tele2 AB |
| Redsense Medical vs. Mantex AB | Redsense Medical vs. Genovis AB | Redsense Medical vs. Vestum AB | Redsense Medical vs. Karolinska Development 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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