Correlation Between Indutrade and Beijer Alma
Can any of the company-specific risk be diversified away by investing in both Indutrade and Beijer Alma 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 Indutrade and Beijer Alma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and Beijer Alma AB, you can compare the effects of market volatilities on Indutrade and Beijer Alma 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 Indutrade with a short position of Beijer Alma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and Beijer Alma.
Diversification Opportunities for Indutrade and Beijer Alma
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indutrade and Beijer is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Beijer Alma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijer Alma AB and Indutrade 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 Indutrade AB are associated (or correlated) with Beijer Alma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijer Alma AB has no effect on the direction of Indutrade i.e., Indutrade and Beijer Alma go up and down completely randomly.
Pair Corralation between Indutrade and Beijer Alma
Assuming the 90 days trading horizon Indutrade is expected to generate 1.02 times less return on investment than Beijer Alma. In addition to that, Indutrade is 1.11 times more volatile than Beijer Alma AB. It trades about 0.23 of its total potential returns per unit of risk. Beijer Alma AB is currently generating about 0.27 per unit of volatility. If you would invest 16,420 in Beijer Alma AB on November 5, 2024 and sell it today you would earn a total of 1,220 from holding Beijer Alma AB or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indutrade AB vs. Beijer Alma AB
Performance |
| Timeline |
| Indutrade AB |
| Beijer Alma AB |
Indutrade and Beijer Alma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and Beijer Alma
The main advantage of trading using opposite Indutrade and Beijer Alma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade position performs unexpectedly, Beijer Alma 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 Beijer Alma will offset losses from the drop in Beijer Alma's long position.| Indutrade vs. Lifco AB | Indutrade vs. Addtech AB | Indutrade vs. NIBE Industrier AB | Indutrade vs. Investment AB Latour |
| Beijer Alma vs. Beijer Ref AB | Beijer Alma vs. Indutrade AB | Beijer Alma vs. Addtech AB | Beijer Alma vs. Nolato 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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