Correlation Between Telia Company and Svenska Handelsbanken
Can any of the company-specific risk be diversified away by investing in both Telia Company and Svenska Handelsbanken 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 Svenska Handelsbanken 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 Svenska Handelsbanken AB, you can compare the effects of market volatilities on Telia Company and Svenska Handelsbanken 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 Svenska Handelsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telia Company and Svenska Handelsbanken.
Diversification Opportunities for Telia Company and Svenska Handelsbanken
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Telia and Svenska is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Telia Company AB and Svenska Handelsbanken AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Handelsbanken 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 Svenska Handelsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Handelsbanken has no effect on the direction of Telia Company i.e., Telia Company and Svenska Handelsbanken go up and down completely randomly.
Pair Corralation between Telia Company and Svenska Handelsbanken
Assuming the 90 days trading horizon Telia Company AB is expected to generate 1.22 times more return on investment than Svenska Handelsbanken. However, Telia Company is 1.22 times more volatile than Svenska Handelsbanken AB. It trades about 0.28 of its potential returns per unit of risk. Svenska Handelsbanken AB is currently generating about 0.34 per unit of risk. If you would invest 3,157 in Telia Company AB on November 18, 2024 and sell it today you would earn a total of 226.00 from holding Telia Company AB or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telia Company AB vs. Svenska Handelsbanken AB
Performance |
| Timeline |
| Telia Company |
| Svenska Handelsbanken |
Telia Company and Svenska Handelsbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telia Company and Svenska Handelsbanken
The main advantage of trading using opposite Telia Company and Svenska Handelsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telia Company position performs unexpectedly, Svenska Handelsbanken 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 Svenska Handelsbanken will offset losses from the drop in Svenska Handelsbanken'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 |
| Svenska Handelsbanken vs. Swedbank AB | Svenska Handelsbanken vs. Nordea Bank Abp | Svenska Handelsbanken vs. Tele2 AB | Svenska Handelsbanken vs. Telia Company 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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