Correlation Between Botnia Exploration and BillerudKorsnas
Can any of the company-specific risk be diversified away by investing in both Botnia Exploration and BillerudKorsnas 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 Botnia Exploration and BillerudKorsnas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Botnia Exploration Holding and BillerudKorsnas AB, you can compare the effects of market volatilities on Botnia Exploration and BillerudKorsnas 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 Botnia Exploration with a short position of BillerudKorsnas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Botnia Exploration and BillerudKorsnas.
Diversification Opportunities for Botnia Exploration and BillerudKorsnas
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Botnia and BillerudKorsnas is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Botnia Exploration Holding and BillerudKorsnas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BillerudKorsnas AB and Botnia Exploration 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 Botnia Exploration Holding are associated (or correlated) with BillerudKorsnas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BillerudKorsnas AB has no effect on the direction of Botnia Exploration i.e., Botnia Exploration and BillerudKorsnas go up and down completely randomly.
Pair Corralation between Botnia Exploration and BillerudKorsnas
Assuming the 90 days trading horizon Botnia Exploration Holding is expected to generate 1.31 times more return on investment than BillerudKorsnas. However, Botnia Exploration is 1.31 times more volatile than BillerudKorsnas AB. It trades about 0.11 of its potential returns per unit of risk. BillerudKorsnas AB is currently generating about -0.03 per unit of risk. If you would invest 1,275 in Botnia Exploration Holding on September 13, 2024 and sell it today you would earn a total of 55.00 from holding Botnia Exploration Holding or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Botnia Exploration Holding vs. BillerudKorsnas AB
Performance |
| Timeline |
| Botnia Exploration |
| BillerudKorsnas AB |
Botnia Exploration and BillerudKorsnas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Botnia Exploration and BillerudKorsnas
The main advantage of trading using opposite Botnia Exploration and BillerudKorsnas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Botnia Exploration position performs unexpectedly, BillerudKorsnas 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 BillerudKorsnas will offset losses from the drop in BillerudKorsnas' long position.| Botnia Exploration vs. aXichem AB | Botnia Exploration vs. BE Group AB | Botnia Exploration vs. Arctic Gold Publ |
| BillerudKorsnas vs. SSAB AB | BillerudKorsnas vs. Svenska Cellulosa Aktiebolaget | BillerudKorsnas vs. Axfood AB | BillerudKorsnas vs. Proact IT Group |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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