Correlation Between Svenska Handelsbanken and Cyxone AB

Can any of the company-specific risk be diversified away by investing in both Svenska Handelsbanken and Cyxone AB 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 Cyxone AB 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 Cyxone AB, you can compare the effects of market volatilities on Svenska Handelsbanken and Cyxone AB 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 Cyxone AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Svenska Handelsbanken and Cyxone AB.

Diversification Opportunities for Svenska Handelsbanken and Cyxone AB

-0.64

Correlation Coefficient

Svenska Handelsbanken  Cyxone AB

Excellent diversification

The 3 months correlation between Svenska and Cyxone is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Svenska Handelsbanken AB and Cyxone AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyxone AB 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 Cyxone AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyxone AB has no effect on the direction of Svenska Handelsbanken i.e., Svenska Handelsbanken and Cyxone AB go up and down completely randomly.

Pair Corralation between Svenska Handelsbanken and Cyxone AB

Assuming the 90 days trading horizon Svenska Handelsbanken is expected to generate 5.8 times less return on investment than Cyxone AB. But when comparing it to its historical volatility, Svenska Handelsbanken AB is 7.1 times less risky than Cyxone AB. It trades about 0.11 of its potential returns per unit of risk. Cyxone AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9.42  in Cyxone AB on March 28, 2024 and sell it today you would earn a total of  1.58  from holding Cyxone AB or generate 16.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Svenska Handelsbanken AB  vs.  Cyxone AB

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. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cyxone AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cyxone AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cyxone AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Svenska Handelsbanken and Cyxone AB

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

The idea behind Svenska Handelsbanken AB and Cyxone AB 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.