Correlation Between Bilia AB and Inwido AB
Can any of the company-specific risk be diversified away by investing in both Bilia AB and Inwido 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 Bilia AB and Inwido AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bilia AB and Inwido AB, you can compare the effects of market volatilities on Bilia AB and Inwido 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 Bilia AB with a short position of Inwido AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bilia AB and Inwido AB.
Diversification Opportunities for Bilia AB and Inwido AB
Very poor diversification
The 3 months correlation between Bilia and Inwido is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bilia AB and Inwido AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inwido AB and Bilia AB 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 Bilia AB are associated (or correlated) with Inwido AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inwido AB has no effect on the direction of Bilia AB i.e., Bilia AB and Inwido AB go up and down completely randomly.
Pair Corralation between Bilia AB and Inwido AB
Assuming the 90 days trading horizon Bilia AB is expected to generate 1.06 times less return on investment than Inwido AB. But when comparing it to its historical volatility, Bilia AB is 1.18 times less risky than Inwido AB. It trades about 0.3 of its potential returns per unit of risk. Inwido AB is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 18,680 in Inwido AB on November 3, 2024 and sell it today you would earn a total of 1,720 from holding Inwido AB or generate 9.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bilia AB vs. Inwido AB
Performance |
| Timeline |
| Bilia AB |
| Inwido AB |
Bilia AB and Inwido AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bilia AB and Inwido AB
The main advantage of trading using opposite Bilia AB and Inwido AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bilia AB position performs unexpectedly, Inwido 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 Inwido AB will offset losses from the drop in Inwido AB's long position.The idea behind Bilia AB and Inwido AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Inwido AB vs. USWE Sports AB | Inwido AB vs. Scandic Hotels Group | Inwido AB vs. FormPipe Software AB | Inwido AB vs. COOR Service Management |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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