Correlation Between BE Group and Dedicare
Can any of the company-specific risk be diversified away by investing in both BE Group and Dedicare 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 Dedicare 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 Dedicare AB, you can compare the effects of market volatilities on BE Group and Dedicare 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 Dedicare. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Group and Dedicare.
Diversification Opportunities for BE Group and Dedicare
Very weak diversification
The 3 months correlation between BEGR and Dedicare is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BE Group AB and Dedicare AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dedicare 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 Dedicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dedicare AB has no effect on the direction of BE Group i.e., BE Group and Dedicare go up and down completely randomly.
Pair Corralation between BE Group and Dedicare
Assuming the 90 days trading horizon BE Group AB is expected to under-perform the Dedicare. But the stock apears to be less risky and, when comparing its historical volatility, BE Group AB is 1.1 times less risky than Dedicare. The stock trades about -0.05 of its potential returns per unit of risk. The Dedicare AB is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 10,537 in Dedicare AB on November 1, 2024 and sell it today you would lose (4,107) from holding Dedicare AB or give up 38.98% 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. Dedicare AB
Performance |
| Timeline |
| BE Group AB |
| Dedicare AB |
BE Group and Dedicare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Group and Dedicare
The main advantage of trading using opposite BE Group and Dedicare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Group position performs unexpectedly, Dedicare 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 Dedicare will offset losses from the drop in Dedicare'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 |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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