Correlation Between Bilia AB and Mekonomen
Can any of the company-specific risk be diversified away by investing in both Bilia AB and Mekonomen 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 Mekonomen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bilia AB and Mekonomen AB, you can compare the effects of market volatilities on Bilia AB and Mekonomen 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 Mekonomen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bilia AB and Mekonomen.
Diversification Opportunities for Bilia AB and Mekonomen
Good diversification
The 3 months correlation between Bilia and Mekonomen is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bilia AB and Mekonomen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekonomen 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 Mekonomen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekonomen AB has no effect on the direction of Bilia AB i.e., Bilia AB and Mekonomen go up and down completely randomly.
Pair Corralation between Bilia AB and Mekonomen
Assuming the 90 days trading horizon Bilia AB is expected to generate 1.4 times more return on investment than Mekonomen. However, Bilia AB is 1.4 times more volatile than Mekonomen AB. It trades about 0.11 of its potential returns per unit of risk. Mekonomen AB is currently generating about -0.04 per unit of risk. If you would invest 12,518 in Bilia AB on November 27, 2024 and sell it today you would earn a total of 1,682 from holding Bilia AB or generate 13.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bilia AB vs. Mekonomen AB
Performance |
| Timeline |
| Bilia AB |
| Mekonomen AB |
Bilia AB and Mekonomen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bilia AB and Mekonomen
The main advantage of trading using opposite Bilia AB and Mekonomen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bilia AB position performs unexpectedly, Mekonomen 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 Mekonomen will offset losses from the drop in Mekonomen's long position.The idea behind Bilia AB and Mekonomen 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.| Mekonomen vs. Clas Ohlson AB | Mekonomen vs. Bilia AB | Mekonomen vs. Byggmax Group AB | Mekonomen vs. Peab 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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