Correlation Between BE Group and B3 Consulting
Can any of the company-specific risk be diversified away by investing in both BE Group and B3 Consulting 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 BE Group and B3 Consulting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BE Group AB and B3 Consulting Group, you can compare the effects of market volatilities on BE Group and B3 Consulting 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 BE Group with a short position of B3 Consulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Group and B3 Consulting.
Diversification Opportunities for BE Group and B3 Consulting
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BEGR and B3 Consulting is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BE Group AB and B3 Consulting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B3 Consulting Group and BE Group 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 BE Group AB are associated (or correlated) with B3 Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B3 Consulting Group has no effect on the direction of BE Group i.e., BE Group and B3 Consulting go up and down completely randomly.
Pair Corralation between BE Group and B3 Consulting
Assuming the 90 days trading horizon BE Group AB is expected to generate 0.95 times more return on investment than B3 Consulting. However, BE Group AB is 1.05 times less risky than B3 Consulting. It trades about -0.02 of its potential returns per unit of risk. B3 Consulting Group is currently generating about -0.04 per unit of risk. If you would invest 7,020 in BE Group AB on September 1, 2024 and sell it today you would lose (2,420) from holding BE Group AB or give up 34.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BE Group AB vs. B3 Consulting Group
Performance |
| Timeline |
| BE Group AB |
| B3 Consulting Group |
BE Group and B3 Consulting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Group and B3 Consulting
The main advantage of trading using opposite BE Group and B3 Consulting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Group position performs unexpectedly, B3 Consulting 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 B3 Consulting will offset losses from the drop in B3 Consulting's long position.| BE Group vs. Bjorn Borg AB | BE Group vs. BioInvent International AB | BE Group vs. Lindab International AB | BE Group vs. Clas Ohlson AB |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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