Correlation Between Bjorn Borg and Rottneros
Can any of the company-specific risk be diversified away by investing in both Bjorn Borg and Rottneros 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 Bjorn Borg and Rottneros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bjorn Borg AB and Rottneros AB, you can compare the effects of market volatilities on Bjorn Borg and Rottneros 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 Bjorn Borg with a short position of Rottneros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bjorn Borg and Rottneros.
Diversification Opportunities for Bjorn Borg and Rottneros
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bjorn and Rottneros is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bjorn Borg AB and Rottneros AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rottneros AB and Bjorn Borg 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 Bjorn Borg AB are associated (or correlated) with Rottneros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rottneros AB has no effect on the direction of Bjorn Borg i.e., Bjorn Borg and Rottneros go up and down completely randomly.
Pair Corralation between Bjorn Borg and Rottneros
Assuming the 90 days trading horizon Bjorn Borg AB is expected to generate 1.42 times more return on investment than Rottneros. However, Bjorn Borg is 1.42 times more volatile than Rottneros AB. It trades about -0.06 of its potential returns per unit of risk. Rottneros AB is currently generating about -0.15 per unit of risk. If you would invest 5,989 in Bjorn Borg AB on September 1, 2024 and sell it today you would lose (992.00) from holding Bjorn Borg AB or give up 16.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bjorn Borg AB vs. Rottneros AB
Performance |
| Timeline |
| Bjorn Borg AB |
| Rottneros AB |
Bjorn Borg and Rottneros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bjorn Borg and Rottneros
The main advantage of trading using opposite Bjorn Borg and Rottneros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bjorn Borg position performs unexpectedly, Rottneros 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 Rottneros will offset losses from the drop in Rottneros' long position.| Bjorn Borg vs. NetJobs Group AB | Bjorn Borg vs. Mantex AB | Bjorn Borg vs. Doxa AB | Bjorn Borg vs. Clean Motion AB |
| Rottneros vs. Holmen AB | Rottneros vs. Svenska Cellulosa Aktiebolaget | Rottneros vs. Husqvarna AB | Rottneros vs. Alfa Laval 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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