Correlation Between Byggma and Goodtech
Can any of the company-specific risk be diversified away by investing in both Byggma and Goodtech 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 Byggma and Goodtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Byggma and Goodtech, you can compare the effects of market volatilities on Byggma and Goodtech 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 Byggma with a short position of Goodtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byggma and Goodtech.
Diversification Opportunities for Byggma and Goodtech
Very weak diversification
The 3 months correlation between Byggma and Goodtech is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Byggma and Goodtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodtech and Byggma 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 Byggma are associated (or correlated) with Goodtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodtech has no effect on the direction of Byggma i.e., Byggma and Goodtech go up and down completely randomly.
Pair Corralation between Byggma and Goodtech
Assuming the 90 days trading horizon Byggma is expected to generate 2.43 times more return on investment than Goodtech. However, Byggma is 2.43 times more volatile than Goodtech. It trades about 0.2 of its potential returns per unit of risk. Goodtech is currently generating about 0.04 per unit of risk. If you would invest 1,505 in Byggma on October 23, 2024 and sell it today you would earn a total of 210.00 from holding Byggma or generate 13.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Byggma vs. Goodtech
Performance |
| Timeline |
| Byggma |
| Goodtech |
Byggma and Goodtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Byggma and Goodtech
The main advantage of trading using opposite Byggma and Goodtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byggma position performs unexpectedly, Goodtech 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 Goodtech will offset losses from the drop in Goodtech's long position.| Byggma vs. AF Gruppen ASA | Byggma vs. American Shipping | Byggma vs. Arendals Fossekompani ASA | Byggma vs. Kid ASA |
| Goodtech vs. Eidesvik Offshore ASA | Goodtech vs. Borgestad A | Goodtech vs. Kitron ASA | Goodtech vs. Havila Shipping ASA |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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