Correlation Between Industrial and Svenska Handelsbanken
Can any of the company-specific risk be diversified away by investing in both Industrial 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 Industrial and Svenska Handelsbanken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial and Commercial and Svenska Handelsbanken PK, you can compare the effects of market volatilities on Industrial 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 Industrial with a short position of Svenska Handelsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial and Svenska Handelsbanken.
Diversification Opportunities for Industrial and Svenska Handelsbanken
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Svenska is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Svenska Handelsbanken PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Handelsbanken and Industrial 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 Industrial and Commercial 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 Industrial i.e., Industrial and Svenska Handelsbanken go up and down completely randomly.
Pair Corralation between Industrial and Svenska Handelsbanken
Assuming the 90 days horizon Industrial and Commercial is expected to under-perform the Svenska Handelsbanken. But the pink sheet apears to be less risky and, when comparing its historical volatility, Industrial and Commercial is 1.44 times less risky than Svenska Handelsbanken. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Svenska Handelsbanken PK is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 525.00 in Svenska Handelsbanken PK on September 6, 2024 and sell it today you would earn a total of 5.00 from holding Svenska Handelsbanken PK or generate 0.95% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Industrial and Commercial vs. Svenska Handelsbanken PK
Performance |
Timeline |
Industrial and Commercial |
Svenska Handelsbanken |
Industrial and Svenska Handelsbanken Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Industrial and Svenska Handelsbanken
The main advantage of trading using opposite Industrial and Svenska Handelsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial 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.Industrial vs. Agricultural Bank | Industrial vs. Bank of America | Industrial vs. Bank of America | Industrial vs. Commonwealth Bank of |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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