Correlation Between Bulten AB and Generic Sweden
Can any of the company-specific risk be diversified away by investing in both Bulten AB and Generic Sweden 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 Bulten AB and Generic Sweden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bulten AB and Generic Sweden publ, you can compare the effects of market volatilities on Bulten AB and Generic Sweden 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 Bulten AB with a short position of Generic Sweden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bulten AB and Generic Sweden.
Diversification Opportunities for Bulten AB and Generic Sweden
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bulten and Generic is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bulten AB and Generic Sweden publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Sweden publ and Bulten AB 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 Bulten AB are associated (or correlated) with Generic Sweden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Sweden publ has no effect on the direction of Bulten AB i.e., Bulten AB and Generic Sweden go up and down completely randomly.
Pair Corralation between Bulten AB and Generic Sweden
Assuming the 90 days trading horizon Bulten AB is expected to under-perform the Generic Sweden. But the stock apears to be less risky and, when comparing its historical volatility, Bulten AB is 1.47 times less risky than Generic Sweden. The stock trades about -0.01 of its potential returns per unit of risk. The Generic Sweden publ is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,400 in Generic Sweden publ on September 1, 2024 and sell it today you would earn a total of 510.00 from holding Generic Sweden publ or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bulten AB vs. Generic Sweden publ
Performance |
| Timeline |
| Bulten AB |
| Generic Sweden publ |
Bulten AB and Generic Sweden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bulten AB and Generic Sweden
The main advantage of trading using opposite Bulten AB and Generic Sweden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bulten AB position performs unexpectedly, Generic Sweden 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 Generic Sweden will offset losses from the drop in Generic Sweden's long position.| Bulten AB vs. NetJobs Group AB | Bulten AB vs. Mantex AB | Bulten AB vs. Doxa AB | Bulten AB vs. Clean Motion AB |
| Generic Sweden vs. Enea AB | Generic Sweden vs. Novotek AB | Generic Sweden vs. Addnode Group AB | Generic Sweden vs. Softronic 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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