Correlation Between Husqvarna and Boliden AB
Can any of the company-specific risk be diversified away by investing in both Husqvarna and Boliden 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 Husqvarna and Boliden AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husqvarna AB and Boliden AB, you can compare the effects of market volatilities on Husqvarna and Boliden 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 Husqvarna with a short position of Boliden AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husqvarna and Boliden AB.
Diversification Opportunities for Husqvarna and Boliden AB
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Husqvarna and Boliden is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Husqvarna AB and Boliden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boliden 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 Boliden AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boliden AB has no effect on the direction of Husqvarna i.e., Husqvarna and Boliden AB go up and down completely randomly.
Pair Corralation between Husqvarna and Boliden AB
Assuming the 90 days trading horizon Husqvarna is expected to generate 9.9 times less return on investment than Boliden AB. But when comparing it to its historical volatility, Husqvarna AB is 1.15 times less risky than Boliden AB. It trades about 0.06 of its potential returns per unit of risk. Boliden AB is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 30,600 in Boliden AB on October 21, 2024 and sell it today you would earn a total of 4,310 from holding Boliden AB or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Husqvarna AB vs. Boliden AB
Performance |
| Timeline |
| Husqvarna AB |
| Boliden AB |
Husqvarna and Boliden AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husqvarna and Boliden AB
The main advantage of trading using opposite Husqvarna and Boliden AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husqvarna position performs unexpectedly, Boliden 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 Boliden AB will offset losses from the drop in Boliden AB's long position.The idea behind Husqvarna AB and Boliden AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Boliden AB vs. Sandvik AB | Boliden AB vs. AB SKF | Boliden AB vs. Alfa Laval AB | Boliden AB vs. AB Electrolux |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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