Correlation Between Bravida Holding and Holmen AB
Can any of the company-specific risk be diversified away by investing in both Bravida Holding and Holmen 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 Bravida Holding and Holmen AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bravida Holding AB and Holmen AB, you can compare the effects of market volatilities on Bravida Holding and Holmen 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 Bravida Holding with a short position of Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bravida Holding and Holmen AB.
Diversification Opportunities for Bravida Holding and Holmen AB
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bravida and Holmen is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bravida Holding AB and Holmen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB and Bravida Holding 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 Bravida Holding AB are associated (or correlated) with Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB has no effect on the direction of Bravida Holding i.e., Bravida Holding and Holmen AB go up and down completely randomly.
Pair Corralation between Bravida Holding and Holmen AB
Assuming the 90 days trading horizon Bravida Holding AB is expected to generate 1.36 times more return on investment than Holmen AB. However, Bravida Holding is 1.36 times more volatile than Holmen AB. It trades about -0.02 of its potential returns per unit of risk. Holmen AB is currently generating about -0.05 per unit of risk. If you would invest 8,285 in Bravida Holding AB on August 29, 2024 and sell it today you would lose (385.00) from holding Bravida Holding AB or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bravida Holding AB vs. Holmen AB
Performance |
| Timeline |
| Bravida Holding AB |
| Holmen AB |
Bravida Holding and Holmen AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bravida Holding and Holmen AB
The main advantage of trading using opposite Bravida Holding and Holmen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bravida Holding position performs unexpectedly, Holmen 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 Holmen AB will offset losses from the drop in Holmen AB's long position.| Bravida Holding vs. Nolato AB | Bravida Holding vs. Indutrade AB | Bravida Holding vs. HEXPOL AB | Bravida Holding vs. Addtech AB |
| Holmen AB vs. Svenska Cellulosa Aktiebolaget | Holmen AB vs. BillerudKorsnas AB | Holmen AB vs. Boliden AB | Holmen AB vs. Husqvarna 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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