Correlation Between Brilliant Future and Embellence Group
Can any of the company-specific risk be diversified away by investing in both Brilliant Future and Embellence 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 Embellence 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 Embellence Group AB, you can compare the effects of market volatilities on Brilliant Future and Embellence 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 Embellence Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brilliant Future and Embellence Group.
Diversification Opportunities for Brilliant Future and Embellence Group
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brilliant and Embellence is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Brilliant Future AB and Embellence Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embellence Group 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 Embellence Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embellence Group has no effect on the direction of Brilliant Future i.e., Brilliant Future and Embellence Group go up and down completely randomly.
Pair Corralation between Brilliant Future and Embellence Group
Assuming the 90 days trading horizon Brilliant Future AB is expected to under-perform the Embellence Group. In addition to that, Brilliant Future is 1.04 times more volatile than Embellence Group AB. It trades about -0.22 of its total potential returns per unit of risk. Embellence Group AB is currently generating about -0.19 per unit of volatility. If you would invest 3,160 in Embellence Group AB on August 30, 2024 and sell it today you would lose (210.00) from holding Embellence Group AB or give up 6.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Brilliant Future AB vs. Embellence Group AB
Performance |
| Timeline |
| Brilliant Future |
| Embellence Group |
Brilliant Future and Embellence Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brilliant Future and Embellence Group
The main advantage of trading using opposite Brilliant Future and Embellence Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brilliant Future position performs unexpectedly, Embellence 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 Embellence Group will offset losses from the drop in Embellence Group's long position.| Brilliant Future vs. Ekobot AB | Brilliant Future vs. Ayima Group AB | Brilliant Future vs. JonDeTech Sensors | Brilliant Future vs. Clean Motion AB |
| Embellence Group vs. AB Electrolux | Embellence Group vs. Husqvarna AB | Embellence Group vs. Essity AB | Embellence Group vs. Dometic Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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