Correlation Between BICO Group and Storskogen Group
Can any of the company-specific risk be diversified away by investing in both BICO Group and Storskogen Group 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 BICO Group and Storskogen Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BICO Group AB and Storskogen Group AB, you can compare the effects of market volatilities on BICO Group and Storskogen Group 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 BICO Group with a short position of Storskogen Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BICO Group and Storskogen Group.
Diversification Opportunities for BICO Group and Storskogen Group
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BICO and Storskogen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding BICO Group AB and Storskogen Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storskogen Group and BICO 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 BICO Group AB are associated (or correlated) with Storskogen Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storskogen Group has no effect on the direction of BICO Group i.e., BICO Group and Storskogen Group go up and down completely randomly.
Pair Corralation between BICO Group and Storskogen Group
Assuming the 90 days trading horizon BICO Group AB is expected to generate 1.29 times more return on investment than Storskogen Group. However, BICO Group is 1.29 times more volatile than Storskogen Group AB. It trades about 0.2 of its potential returns per unit of risk. Storskogen Group AB is currently generating about 0.1 per unit of risk. If you would invest 3,186 in BICO Group AB on December 10, 2024 and sell it today you would earn a total of 770.00 from holding BICO Group AB or generate 24.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BICO Group AB vs. Storskogen Group AB
Performance |
| Timeline |
| BICO Group AB |
| Storskogen Group |
BICO Group and Storskogen Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BICO Group and Storskogen Group
The main advantage of trading using opposite BICO Group and Storskogen Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BICO Group position performs unexpectedly, Storskogen Group 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 Storskogen Group will offset losses from the drop in Storskogen Group's long position.| BICO Group vs. Sinch 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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