Correlation Between Svenska Handelsbanken and ABN AMRO

Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and ABN AMRO 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 ABN AMRO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Svenska Handelsbanken AB and ABN AMRO Bank, you can compare the effects of market volatilities on Svenska Handelsbanken and ABN AMRO 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 ABN AMRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and ABN AMRO.

Diversification Opportunities for Svenska Handelsbanken and ABN AMRO

0.0

Correlation Coefficient

Svenska Handelsbanken  ABN AMRO

Pay attention - limited upside

The 3 months correlation between Svenska and ABN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and ABN AMRO Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABN AMRO Bank 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 AB are associated (or correlated) with ABN AMRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABN AMRO Bank has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and ABN AMRO go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and ABN AMRO

Assuming the 90 days horizon Svenska Handelsbanken AB is expected to generate 1.54 times more return on investment than ABN AMRO. However, Svenska Handelsbanken is 1.54 times more volatile than ABN AMRO Bank. It trades about 0.0 of its potential returns per unit of risk. ABN AMRO Bank is currently generating about -0.18 per unit of risk. If you would invest  1,059  in Svenska Handelsbanken AB on September 24, 2024 and sell it today you would lose (15.00) from holding Svenska Handelsbanken AB or give up 1.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Svenska Handelsbanken AB  vs.  ABN AMRO Bank

Svenska Handelsbanken

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Svenska Handelsbanken AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Svenska Handelsbanken is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ABN AMRO Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABN AMRO Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Svenska Handelsbanken and ABN AMRO

The main advantage of trading using opposite Svenska Handelsbanken and ABN AMRO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Svenska Handelsbanken position performs unexpectedly, ABN AMRO 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 ABN AMRO will offset losses from the drop in ABN AMRO's long position.

The idea behind Svenska Handelsbanken AB and ABN AMRO Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.