Correlation Between BE Group and Botnia Exploration
Can any of the company-specific risk be diversified away by investing in both BE Group and Botnia Exploration 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 Botnia Exploration 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 Botnia Exploration Holding, you can compare the effects of market volatilities on BE Group and Botnia Exploration 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 Botnia Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Group and Botnia Exploration.
Diversification Opportunities for BE Group and Botnia Exploration
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BEGR and Botnia is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BE Group AB and Botnia Exploration Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Botnia Exploration 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 Botnia Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Botnia Exploration has no effect on the direction of BE Group i.e., BE Group and Botnia Exploration go up and down completely randomly.
Pair Corralation between BE Group and Botnia Exploration
Assuming the 90 days trading horizon BE Group AB is expected to under-perform the Botnia Exploration. But the stock apears to be less risky and, when comparing its historical volatility, BE Group AB is 1.76 times less risky than Botnia Exploration. The stock trades about -0.37 of its potential returns per unit of risk. The Botnia Exploration Holding is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,340 in Botnia Exploration Holding on September 2, 2024 and sell it today you would lose (60.00) from holding Botnia Exploration Holding or give up 4.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BE Group AB vs. Botnia Exploration Holding
Performance |
| Timeline |
| BE Group AB |
| Botnia Exploration |
BE Group and Botnia Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Group and Botnia Exploration
The main advantage of trading using opposite BE Group and Botnia Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Group position performs unexpectedly, Botnia Exploration 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 Botnia Exploration will offset losses from the drop in Botnia Exploration'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 |
| Botnia Exploration vs. aXichem AB | Botnia Exploration vs. BE Group AB | Botnia Exploration vs. Arctic Gold Publ |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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