Correlation Between S-E BANKEN and Indutrade

Can any of the company-specific risk be diversified away by investing in both S-E BANKEN and Indutrade 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 S-E BANKEN and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between S E BANKEN A and Indutrade AB, you can compare the effects of market volatilities on S-E BANKEN and Indutrade 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 S-E BANKEN with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of S-E BANKEN and Indutrade.

Diversification Opportunities for S-E BANKEN and Indutrade

-0.07

Correlation Coefficient

S-E BANKEN  Indutrade

Good diversification

The 3 months correlation between S-E and Indutrade is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding S E BANKEN A and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and S-E BANKEN 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 S E BANKEN A are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of S-E BANKEN i.e., S-E BANKEN and Indutrade go up and down completely randomly.

Pair Corralation between S-E BANKEN and Indutrade

Assuming the 90 days trading horizon S E BANKEN A is expected to generate 0.72 times more return on investment than Indutrade. However, S E BANKEN A is 1.38 times less risky than Indutrade. It trades about 0.14 of its potential returns per unit of risk. Indutrade AB is currently generating about -0.08 per unit of risk. If you would invest  1,363  in S E BANKEN A on April 25, 2025 and sell it today you would earn a total of  141.00  from holding S E BANKEN A or generate 10.34% return on investment over 90 days.

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

S E BANKEN A   vs.  Indutrade AB

S E BANKEN

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in S E BANKEN A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, S-E BANKEN may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Indutrade AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with S-E BANKEN and Indutrade

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

The idea behind S E BANKEN A and Indutrade 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.