Correlation Between BillerudKorsnas and Holmen AB
Can any of the company-specific risk be diversified away by investing in both BillerudKorsnas and Holmen 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 BillerudKorsnas and Holmen AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BillerudKorsnas AB and Holmen AB, you can compare the effects of market volatilities on BillerudKorsnas and Holmen 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 BillerudKorsnas with a short position of Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of BillerudKorsnas and Holmen AB.
Diversification Opportunities for BillerudKorsnas and Holmen AB
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BillerudKorsnas and Holmen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BillerudKorsnas AB and Holmen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB and BillerudKorsnas 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 BillerudKorsnas AB are associated (or correlated) with Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB has no effect on the direction of BillerudKorsnas i.e., BillerudKorsnas and Holmen AB go up and down completely randomly.
Pair Corralation between BillerudKorsnas and Holmen AB
Assuming the 90 days trading horizon BillerudKorsnas AB is expected to under-perform the Holmen AB. In addition to that, BillerudKorsnas is 1.7 times more volatile than Holmen AB. It trades about -0.05 of its total potential returns per unit of risk. Holmen AB is currently generating about -0.06 per unit of volatility. If you would invest 42,700 in Holmen AB on August 25, 2024 and sell it today you would lose (1,900) from holding Holmen AB or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BillerudKorsnas AB vs. Holmen AB
Performance |
| Timeline |
| BillerudKorsnas AB |
| Holmen AB |
BillerudKorsnas and Holmen AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BillerudKorsnas and Holmen AB
The main advantage of trading using opposite BillerudKorsnas and Holmen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BillerudKorsnas position performs unexpectedly, Holmen 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 Holmen AB will offset losses from the drop in Holmen AB's long position.| BillerudKorsnas vs. Svenska Aerogel Holding | BillerudKorsnas vs. Kancera AB | BillerudKorsnas vs. BIMobject AB | BillerudKorsnas vs. KABE Group AB |
| Holmen AB vs. Tele2 AB | Holmen AB vs. Stora Enso Oyj | Holmen AB vs. BillerudKorsnas AB | Holmen AB vs. Svenska Cellulosa Aktiebolaget |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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