Correlation Between Afry AB and Bravida Holding
Can any of the company-specific risk be diversified away by investing in both Afry AB and Bravida Holding 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 Afry AB and Bravida Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Afry AB and Bravida Holding AB, you can compare the effects of market volatilities on Afry AB and Bravida Holding 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 Afry AB with a short position of Bravida Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Afry AB and Bravida Holding.
Diversification Opportunities for Afry AB and Bravida Holding
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Afry and Bravida is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Afry AB and Bravida Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravida Holding AB and Afry AB 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 Afry AB are associated (or correlated) with Bravida Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravida Holding AB has no effect on the direction of Afry AB i.e., Afry AB and Bravida Holding go up and down completely randomly.
Pair Corralation between Afry AB and Bravida Holding
Assuming the 90 days trading horizon Afry AB is expected to under-perform the Bravida Holding. But the stock apears to be less risky and, when comparing its historical volatility, Afry AB is 1.16 times less risky than Bravida Holding. The stock trades about -0.15 of its potential returns per unit of risk. The Bravida Holding AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 7,870 in Bravida Holding AB on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Bravida Holding AB or generate 0.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Afry AB vs. Bravida Holding AB
Performance |
| Timeline |
| Afry AB |
| Bravida Holding AB |
Afry AB and Bravida Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Afry AB and Bravida Holding
The main advantage of trading using opposite Afry AB and Bravida Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Afry AB position performs unexpectedly, Bravida Holding 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 Bravida Holding will offset losses from the drop in Bravida Holding's long position.The idea behind Afry AB and Bravida Holding 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.| Bravida Holding vs. Nolato AB | Bravida Holding vs. Indutrade AB | Bravida Holding vs. HEXPOL AB | Bravida Holding vs. Addtech 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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