Correlation Between Leading Edge and Boliden AB
Can any of the company-specific risk be diversified away by investing in both Leading Edge 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 Leading Edge and Boliden AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leading Edge Materials and Boliden AB, you can compare the effects of market volatilities on Leading Edge 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 Leading Edge with a short position of Boliden AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Boliden AB.
Diversification Opportunities for Leading Edge and Boliden AB
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leading and Boliden is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Boliden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boliden AB and Leading Edge 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 Leading Edge Materials 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 Leading Edge i.e., Leading Edge and Boliden AB go up and down completely randomly.
Pair Corralation between Leading Edge and Boliden AB
Assuming the 90 days trading horizon Leading Edge Materials is expected to generate 2.3 times more return on investment than Boliden AB. However, Leading Edge is 2.3 times more volatile than Boliden AB. It trades about 0.0 of its potential returns per unit of risk. Boliden AB is currently generating about -0.01 per unit of risk. If you would invest 142.00 in Leading Edge Materials on August 28, 2024 and sell it today you would lose (63.00) from holding Leading Edge Materials or give up 44.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leading Edge Materials vs. Boliden AB
Performance |
| Timeline |
| Leading Edge Materials |
| Boliden AB |
Leading Edge and Boliden AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and Boliden AB
The main advantage of trading using opposite Leading Edge and Boliden AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge 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.| Leading Edge vs. Boliden AB | Leading Edge vs. KABE Group AB | Leading Edge vs. IAR Systems Group | Leading Edge vs. Norva24 Group AB |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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