Correlation Between Beijer Ref and Vestum AB
Can any of the company-specific risk be diversified away by investing in both Beijer Ref and Vestum 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 Beijer Ref and Vestum AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beijer Ref AB and Vestum AB, you can compare the effects of market volatilities on Beijer Ref and Vestum 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 Beijer Ref with a short position of Vestum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijer Ref and Vestum AB.
Diversification Opportunities for Beijer Ref and Vestum AB
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beijer and Vestum is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Beijer Ref AB and Vestum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestum AB and Beijer Ref 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 Beijer Ref AB are associated (or correlated) with Vestum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestum AB has no effect on the direction of Beijer Ref i.e., Beijer Ref and Vestum AB go up and down completely randomly.
Pair Corralation between Beijer Ref and Vestum AB
Assuming the 90 days trading horizon Beijer Ref AB is expected to generate 0.99 times more return on investment than Vestum AB. However, Beijer Ref AB is 1.01 times less risky than Vestum AB. It trades about 0.01 of its potential returns per unit of risk. Vestum AB is currently generating about -0.14 per unit of risk. If you would invest 16,190 in Beijer Ref AB on August 29, 2024 and sell it today you would lose (20.00) from holding Beijer Ref AB or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijer Ref AB vs. Vestum AB
Performance |
| Timeline |
| Beijer Ref AB |
| Vestum AB |
Beijer Ref and Vestum AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijer Ref and Vestum AB
The main advantage of trading using opposite Beijer Ref and Vestum AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijer Ref position performs unexpectedly, Vestum 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 Vestum AB will offset losses from the drop in Vestum AB's long position.| Beijer Ref vs. Addtech AB | Beijer Ref vs. Indutrade AB | Beijer Ref vs. Lifco AB | Beijer Ref vs. NIBE Industrier AB |
| Vestum AB vs. Sweco AB | Vestum AB vs. AAK AB | Vestum AB vs. Beijer Ref AB | Vestum AB vs. Bravida Holding 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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