Correlation Between Boliden AB and Lipum AB
Can any of the company-specific risk be diversified away by investing in both Boliden AB and Lipum 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 Lipum 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 Lipum AB, you can compare the effects of market volatilities on Boliden AB and Lipum 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 Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boliden AB and Lipum AB.
Diversification Opportunities for Boliden AB and Lipum AB
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boliden and Lipum is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Boliden AB and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum 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 Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Boliden AB i.e., Boliden AB and Lipum AB go up and down completely randomly.
Pair Corralation between Boliden AB and Lipum AB
Assuming the 90 days trading horizon Boliden AB is expected to under-perform the Lipum AB. But the stock apears to be less risky and, when comparing its historical volatility, Boliden AB is 2.26 times less risky than Lipum AB. The stock trades about -0.01 of its potential returns per unit of risk. The Lipum AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,405 in Lipum AB on August 28, 2024 and sell it today you would earn a total of 275.00 from holding Lipum AB or generate 19.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boliden AB vs. Lipum AB
Performance |
| Timeline |
| Boliden AB |
| Lipum AB |
Boliden AB and Lipum AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boliden AB and Lipum AB
The main advantage of trading using opposite Boliden AB and Lipum AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boliden AB position performs unexpectedly, Lipum 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 Lipum AB will offset losses from the drop in Lipum AB's long position.| Boliden AB vs. Sandvik AB | Boliden AB vs. AB SKF | Boliden AB vs. Alfa Laval AB | Boliden AB vs. AB Electrolux |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |