Correlation Between Boliden AB and Linc AB
Can any of the company-specific risk be diversified away by investing in both Boliden AB and Linc 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 Boliden AB and Linc AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boliden AB and Linc AB, you can compare the effects of market volatilities on Boliden AB and Linc 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 Boliden AB with a short position of Linc AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boliden AB and Linc AB.
Diversification Opportunities for Boliden AB and Linc AB
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boliden and Linc is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Boliden AB and Linc AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linc AB and Boliden 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 Boliden AB are associated (or correlated) with Linc AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linc AB has no effect on the direction of Boliden AB i.e., Boliden AB and Linc AB go up and down completely randomly.
Pair Corralation between Boliden AB and Linc AB
Assuming the 90 days trading horizon Boliden AB is expected to generate 1.22 times more return on investment than Linc AB. However, Boliden AB is 1.22 times more volatile than Linc AB. It trades about -0.09 of its potential returns per unit of risk. Linc AB is currently generating about -0.19 per unit of risk. If you would invest 33,940 in Boliden AB on September 3, 2024 and sell it today you would lose (1,400) from holding Boliden AB or give up 4.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boliden AB vs. Linc AB
Performance |
| Timeline |
| Boliden AB |
| Linc AB |
Boliden AB and Linc AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boliden AB and Linc AB
The main advantage of trading using opposite Boliden AB and Linc AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boliden AB position performs unexpectedly, Linc 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 Linc AB will offset losses from the drop in Linc AB's long position.| Boliden AB vs. Auriant Mining AB | Boliden AB vs. aXichem AB | Boliden AB vs. Clean Motion AB | Boliden AB vs. KABE Group AB |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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