Correlation Between Alfa Laval and BillerudKorsnas
Can any of the company-specific risk be diversified away by investing in both Alfa Laval and BillerudKorsnas 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 Alfa Laval and BillerudKorsnas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Laval AB and BillerudKorsnas AB, you can compare the effects of market volatilities on Alfa Laval and BillerudKorsnas 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 Alfa Laval with a short position of BillerudKorsnas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Laval and BillerudKorsnas.
Diversification Opportunities for Alfa Laval and BillerudKorsnas
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alfa and BillerudKorsnas is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Laval AB and BillerudKorsnas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BillerudKorsnas AB and Alfa Laval 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 Alfa Laval AB are associated (or correlated) with BillerudKorsnas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BillerudKorsnas AB has no effect on the direction of Alfa Laval i.e., Alfa Laval and BillerudKorsnas go up and down completely randomly.
Pair Corralation between Alfa Laval and BillerudKorsnas
Assuming the 90 days trading horizon Alfa Laval AB is expected to generate 0.7 times more return on investment than BillerudKorsnas. However, Alfa Laval AB is 1.43 times less risky than BillerudKorsnas. It trades about 0.07 of its potential returns per unit of risk. BillerudKorsnas AB is currently generating about -0.03 per unit of risk. If you would invest 29,758 in Alfa Laval AB on September 1, 2024 and sell it today you would earn a total of 16,672 from holding Alfa Laval AB or generate 56.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Laval AB vs. BillerudKorsnas AB
Performance |
| Timeline |
| Alfa Laval AB |
| BillerudKorsnas AB |
Alfa Laval and BillerudKorsnas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Laval and BillerudKorsnas
The main advantage of trading using opposite Alfa Laval and BillerudKorsnas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Laval position performs unexpectedly, BillerudKorsnas 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 BillerudKorsnas will offset losses from the drop in BillerudKorsnas' long position.| Alfa Laval vs. Sandvik AB | Alfa Laval vs. AB SKF | Alfa Laval vs. ASSA ABLOY AB | Alfa Laval vs. Atlas Copco AB |
| BillerudKorsnas vs. Holmen AB | BillerudKorsnas vs. Svenska Cellulosa Aktiebolaget | BillerudKorsnas vs. Husqvarna AB | BillerudKorsnas vs. Alfa Laval 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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