Correlation Between Brilliant Future and Alcadon Group
Can any of the company-specific risk be diversified away by investing in both Brilliant Future and Alcadon Group 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 Brilliant Future and Alcadon Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brilliant Future AB and Alcadon Group AB, you can compare the effects of market volatilities on Brilliant Future and Alcadon Group 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 Brilliant Future with a short position of Alcadon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brilliant Future and Alcadon Group.
Diversification Opportunities for Brilliant Future and Alcadon Group
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brilliant and Alcadon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Future AB and Alcadon Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcadon Group AB and Brilliant Future 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 Brilliant Future AB are associated (or correlated) with Alcadon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcadon Group AB has no effect on the direction of Brilliant Future i.e., Brilliant Future and Alcadon Group go up and down completely randomly.
Pair Corralation between Brilliant Future and Alcadon Group
Assuming the 90 days trading horizon Brilliant Future AB is expected to generate 0.88 times more return on investment than Alcadon Group. However, Brilliant Future AB is 1.14 times less risky than Alcadon Group. It trades about -0.02 of its potential returns per unit of risk. Alcadon Group AB is currently generating about -0.06 per unit of risk. If you would invest 662.00 in Brilliant Future AB on August 27, 2024 and sell it today you would lose (192.00) from holding Brilliant Future AB or give up 29.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brilliant Future AB vs. Alcadon Group AB
Performance |
| Timeline |
| Brilliant Future |
| Alcadon Group AB |
Brilliant Future and Alcadon Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brilliant Future and Alcadon Group
The main advantage of trading using opposite Brilliant Future and Alcadon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brilliant Future position performs unexpectedly, Alcadon Group 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 Alcadon Group will offset losses from the drop in Alcadon Group's long position.| Brilliant Future vs. VIMAB Group AB | Brilliant Future vs. Enersize Oy | Brilliant Future vs. Mekonomen AB | Brilliant Future vs. Embellence Group AB |
| Alcadon Group vs. DistIT AB | Alcadon Group vs. Addnode Group AB | Alcadon Group vs. Awardit AB | Alcadon Group vs. Avensia publ 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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