Correlation Between BillerudKorsnas and Nolato AB
Can any of the company-specific risk be diversified away by investing in both BillerudKorsnas and Nolato 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 Nolato 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 Nolato AB, you can compare the effects of market volatilities on BillerudKorsnas and Nolato 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 Nolato AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of BillerudKorsnas and Nolato AB.
Diversification Opportunities for BillerudKorsnas and Nolato AB
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BillerudKorsnas and Nolato is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BillerudKorsnas AB and Nolato AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nolato 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 Nolato AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nolato AB has no effect on the direction of BillerudKorsnas i.e., BillerudKorsnas and Nolato AB go up and down completely randomly.
Pair Corralation between BillerudKorsnas and Nolato AB
Assuming the 90 days trading horizon BillerudKorsnas is expected to generate 1.72 times less return on investment than Nolato AB. But when comparing it to its historical volatility, BillerudKorsnas AB is 1.59 times less risky than Nolato AB. It trades about 0.33 of its potential returns per unit of risk. Nolato AB is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 5,540 in Nolato AB on November 27, 2024 and sell it today you would earn a total of 775.00 from holding Nolato AB or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BillerudKorsnas AB vs. Nolato AB
Performance |
| Timeline |
| BillerudKorsnas AB |
| Nolato AB |
BillerudKorsnas and Nolato AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BillerudKorsnas and Nolato AB
The main advantage of trading using opposite BillerudKorsnas and Nolato AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BillerudKorsnas position performs unexpectedly, Nolato 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 Nolato AB will offset losses from the drop in Nolato AB's long position.| BillerudKorsnas vs. Holmen AB | BillerudKorsnas vs. Svenska Cellulosa Aktiebolaget | BillerudKorsnas vs. Husqvarna AB | BillerudKorsnas vs. Alfa Laval AB |
| Nolato AB vs. HEXPOL AB | Nolato AB vs. Trelleborg AB | Nolato AB vs. Indutrade AB | Nolato AB vs. Vitrolife 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |