Correlation Between BE Group and Bulten AB
Can any of the company-specific risk be diversified away by investing in both BE Group and Bulten AB 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 Bulten AB 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 Bulten AB, you can compare the effects of market volatilities on BE Group and Bulten AB 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 Bulten AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Group and Bulten AB.
Diversification Opportunities for BE Group and Bulten AB
Significant diversification
The 3 months correlation between BEGR and Bulten is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding BE Group AB and Bulten AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bulten AB 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 Bulten AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bulten AB has no effect on the direction of BE Group i.e., BE Group and Bulten AB go up and down completely randomly.
Pair Corralation between BE Group and Bulten AB
Assuming the 90 days trading horizon BE Group AB is expected to under-perform the Bulten AB. But the stock apears to be less risky and, when comparing its historical volatility, BE Group AB is 1.58 times less risky than Bulten AB. The stock trades about -0.29 of its potential returns per unit of risk. The Bulten AB is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 6,970 in Bulten AB on August 30, 2024 and sell it today you would lose (200.00) from holding Bulten AB or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BE Group AB vs. Bulten AB
Performance |
| Timeline |
| BE Group AB |
| Bulten AB |
BE Group and Bulten AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Group and Bulten AB
The main advantage of trading using opposite BE Group and Bulten AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Group position performs unexpectedly, Bulten AB 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 Bulten AB will offset losses from the drop in Bulten AB's long position.| BE Group vs. Troax Group AB | BE Group vs. NIBE Industrier AB | BE Group vs. Hexatronic Group AB | BE Group vs. Bufab Holding 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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