Correlation Between CirChem AB and Bawat Water
Can any of the company-specific risk be diversified away by investing in both CirChem AB and Bawat Water 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 CirChem AB and Bawat Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CirChem AB and Bawat Water Technologies, you can compare the effects of market volatilities on CirChem AB and Bawat Water 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 CirChem AB with a short position of Bawat Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of CirChem AB and Bawat Water.
Diversification Opportunities for CirChem AB and Bawat Water
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CirChem and Bawat is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CirChem AB and Bawat Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bawat Water Technologies and CirChem 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 CirChem AB are associated (or correlated) with Bawat Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bawat Water Technologies has no effect on the direction of CirChem AB i.e., CirChem AB and Bawat Water go up and down completely randomly.
Pair Corralation between CirChem AB and Bawat Water
Assuming the 90 days trading horizon CirChem AB is expected to under-perform the Bawat Water. But the stock apears to be less risky and, when comparing its historical volatility, CirChem AB is 1.77 times less risky than Bawat Water. The stock trades about 0.0 of its potential returns per unit of risk. The Bawat Water Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 218.00 in Bawat Water Technologies on August 29, 2024 and sell it today you would lose (111.00) from holding Bawat Water Technologies or give up 50.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CirChem AB vs. Bawat Water Technologies
Performance |
| Timeline |
| CirChem AB |
| Bawat Water Technologies |
CirChem AB and Bawat Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CirChem AB and Bawat Water
The main advantage of trading using opposite CirChem AB and Bawat Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CirChem AB position performs unexpectedly, Bawat Water 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 Bawat Water will offset losses from the drop in Bawat Water's long position.| CirChem AB vs. Storytel AB | CirChem AB vs. Stillfront Group AB | CirChem AB vs. Hexatronic Group AB | CirChem AB vs. Jetpak Top Holding |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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