Correlation Between Borgestad and Goodtech
Can any of the company-specific risk be diversified away by investing in both Borgestad 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 Borgestad and Goodtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Borgestad A and Goodtech, you can compare the effects of market volatilities on Borgestad 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 Borgestad with a short position of Goodtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borgestad and Goodtech.
Diversification Opportunities for Borgestad and Goodtech
Weak diversification
The 3 months correlation between Borgestad and Goodtech is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Borgestad A and Goodtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodtech and Borgestad 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 Borgestad A 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 Borgestad i.e., Borgestad and Goodtech go up and down completely randomly.
Pair Corralation between Borgestad and Goodtech
Assuming the 90 days trading horizon Borgestad A is expected to generate 1.24 times more return on investment than Goodtech. However, Borgestad is 1.24 times more volatile than Goodtech. It trades about 0.07 of its potential returns per unit of risk. Goodtech is currently generating about -0.02 per unit of risk. If you would invest 1,200 in Borgestad A on November 3, 2024 and sell it today you would earn a total of 572.00 from holding Borgestad A or generate 47.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Borgestad A vs. Goodtech
Performance |
| Timeline |
| Borgestad A |
| Goodtech |
Borgestad and Goodtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borgestad and Goodtech
The main advantage of trading using opposite Borgestad and Goodtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borgestad 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.| Borgestad vs. Goodtech | Borgestad vs. Havila Shipping ASA | Borgestad vs. Eidesvik Offshore ASA | Borgestad vs. Byggma |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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