Correlation Between Holmen AB and Bravida Holding
Can any of the company-specific risk be diversified away by investing in both Holmen AB and Bravida Holding 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 Holmen AB and Bravida Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB and Bravida Holding AB, you can compare the effects of market volatilities on Holmen AB and Bravida Holding 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 Holmen AB with a short position of Bravida Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and Bravida Holding.
Diversification Opportunities for Holmen AB and Bravida Holding
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Holmen and Bravida is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB and Bravida Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravida Holding AB and Holmen 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 Holmen AB are associated (or correlated) with Bravida Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravida Holding AB has no effect on the direction of Holmen AB i.e., Holmen AB and Bravida Holding go up and down completely randomly.
Pair Corralation between Holmen AB and Bravida Holding
Assuming the 90 days trading horizon Holmen AB is expected to generate 0.62 times more return on investment than Bravida Holding. However, Holmen AB is 1.62 times less risky than Bravida Holding. It trades about 0.0 of its potential returns per unit of risk. Bravida Holding AB is currently generating about -0.01 per unit of risk. If you would invest 41,839 in Holmen AB on August 29, 2024 and sell it today you would lose (1,319) from holding Holmen AB or give up 3.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holmen AB vs. Bravida Holding AB
Performance |
| Timeline |
| Holmen AB |
| Bravida Holding AB |
Holmen AB and Bravida Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and Bravida Holding
The main advantage of trading using opposite Holmen AB and Bravida Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB position performs unexpectedly, Bravida Holding 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 Bravida Holding will offset losses from the drop in Bravida Holding's long position.| Holmen AB vs. Svenska Cellulosa Aktiebolaget | Holmen AB vs. BillerudKorsnas AB | Holmen AB vs. Boliden AB | Holmen AB vs. Husqvarna AB |
| Bravida Holding vs. Nolato AB | Bravida Holding vs. Indutrade AB | Bravida Holding vs. HEXPOL AB | Bravida Holding vs. Addtech 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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