Correlation Between Telia Company and Skandinaviska Enskilda
Can any of the company-specific risk be diversified away by investing in both Telia Company and Skandinaviska Enskilda 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 Telia Company and Skandinaviska Enskilda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telia Company AB and Skandinaviska Enskilda Banken, you can compare the effects of market volatilities on Telia Company and Skandinaviska Enskilda 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 Telia Company with a short position of Skandinaviska Enskilda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telia Company and Skandinaviska Enskilda.
Diversification Opportunities for Telia Company and Skandinaviska Enskilda
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Telia and Skandinaviska is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB and Skandinaviska Enskilda Banken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skandinaviska Enskilda and Telia Company 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 Telia Company AB are associated (or correlated) with Skandinaviska Enskilda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skandinaviska Enskilda has no effect on the direction of Telia Company i.e., Telia Company and Skandinaviska Enskilda go up and down completely randomly.
Pair Corralation between Telia Company and Skandinaviska Enskilda
Assuming the 90 days trading horizon Telia Company AB is expected to generate 1.2 times more return on investment than Skandinaviska Enskilda. However, Telia Company is 1.2 times more volatile than Skandinaviska Enskilda Banken. It trades about 0.11 of its potential returns per unit of risk. Skandinaviska Enskilda Banken is currently generating about 0.03 per unit of risk. If you would invest 3,096 in Telia Company AB on September 1, 2024 and sell it today you would earn a total of 99.00 from holding Telia Company AB or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telia Company AB vs. Skandinaviska Enskilda Banken
Performance |
| Timeline |
| Telia Company |
| Skandinaviska Enskilda |
Telia Company and Skandinaviska Enskilda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telia Company and Skandinaviska Enskilda
The main advantage of trading using opposite Telia Company and Skandinaviska Enskilda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telia Company position performs unexpectedly, Skandinaviska Enskilda 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 Skandinaviska Enskilda will offset losses from the drop in Skandinaviska Enskilda's long position.| Telia Company vs. Tele2 AB | Telia Company vs. Swedbank AB | Telia Company vs. Svenska Handelsbanken AB | Telia Company vs. Nordea Bank Abp |
| Skandinaviska Enskilda vs. Svenska Handelsbanken AB | Skandinaviska Enskilda vs. Telia Company AB | Skandinaviska Enskilda vs. Tele2 AB | Skandinaviska Enskilda vs. H M Hennes |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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