Correlation Between BTS Group and Midsona AB
Can any of the company-specific risk be diversified away by investing in both BTS Group and Midsona 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 BTS Group and Midsona AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTS Group AB and Midsona AB, you can compare the effects of market volatilities on BTS Group and Midsona 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 BTS Group with a short position of Midsona AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTS Group and Midsona AB.
Diversification Opportunities for BTS Group and Midsona AB
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BTS and Midsona is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding BTS Group AB and Midsona AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midsona AB and BTS Group 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 BTS Group AB are associated (or correlated) with Midsona AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midsona AB has no effect on the direction of BTS Group i.e., BTS Group and Midsona AB go up and down completely randomly.
Pair Corralation between BTS Group and Midsona AB
Assuming the 90 days trading horizon BTS Group is expected to generate 1.93 times less return on investment than Midsona AB. But when comparing it to its historical volatility, BTS Group AB is 1.54 times less risky than Midsona AB. It trades about 0.01 of its potential returns per unit of risk. Midsona AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,200 in Midsona AB on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Midsona AB or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
BTS Group AB vs. Midsona AB
Performance |
| Timeline |
| BTS Group AB |
| Midsona AB |
BTS Group and Midsona AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTS Group and Midsona AB
The main advantage of trading using opposite BTS Group and Midsona AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTS Group position performs unexpectedly, Midsona 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 Midsona AB will offset losses from the drop in Midsona AB's long position.| BTS Group vs. Biotage AB | BTS Group vs. Addnode Group AB | BTS Group vs. Beijer Ref AB | BTS Group vs. CellaVision AB |
| Midsona AB vs. Midsona AB | Midsona AB vs. Know IT AB | Midsona AB vs. Probi AB | Midsona AB vs. BTS 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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