Correlation Between Husqvarna and BillerudKorsnas
Can any of the company-specific risk be diversified away by investing in both Husqvarna and BillerudKorsnas 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 Husqvarna and BillerudKorsnas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husqvarna AB and BillerudKorsnas AB, you can compare the effects of market volatilities on Husqvarna and BillerudKorsnas 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 Husqvarna with a short position of BillerudKorsnas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husqvarna and BillerudKorsnas.
Diversification Opportunities for Husqvarna and BillerudKorsnas
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Husqvarna and BillerudKorsnas is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna AB and BillerudKorsnas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BillerudKorsnas AB and Husqvarna 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 Husqvarna AB are associated (or correlated) with BillerudKorsnas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BillerudKorsnas AB has no effect on the direction of Husqvarna i.e., Husqvarna and BillerudKorsnas go up and down completely randomly.
Pair Corralation between Husqvarna and BillerudKorsnas
Assuming the 90 days trading horizon Husqvarna AB is expected to under-perform the BillerudKorsnas. But the stock apears to be less risky and, when comparing its historical volatility, Husqvarna AB is 1.01 times less risky than BillerudKorsnas. The stock trades about -0.04 of its potential returns per unit of risk. The BillerudKorsnas AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9,792 in BillerudKorsnas AB on August 24, 2024 and sell it today you would lose (22.00) from holding BillerudKorsnas AB or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Husqvarna AB vs. BillerudKorsnas AB
Performance |
| Timeline |
| Husqvarna AB |
| BillerudKorsnas AB |
Husqvarna and BillerudKorsnas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husqvarna and BillerudKorsnas
The main advantage of trading using opposite Husqvarna and BillerudKorsnas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husqvarna position performs unexpectedly, BillerudKorsnas 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 BillerudKorsnas will offset losses from the drop in BillerudKorsnas' long position.| Husqvarna vs. AB Electrolux | Husqvarna vs. Stora Enso Oyj | Husqvarna vs. Industrivarden AB ser | Husqvarna vs. Holmen AB |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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