Correlation Between Lindab International and BillerudKorsnas
Can any of the company-specific risk be diversified away by investing in both Lindab International 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 Lindab International and BillerudKorsnas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindab International AB and BillerudKorsnas AB, you can compare the effects of market volatilities on Lindab International 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 Lindab International with a short position of BillerudKorsnas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindab International and BillerudKorsnas.
Diversification Opportunities for Lindab International and BillerudKorsnas
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lindab and BillerudKorsnas is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lindab International AB and BillerudKorsnas AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BillerudKorsnas AB and Lindab International 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 Lindab International 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 Lindab International i.e., Lindab International and BillerudKorsnas go up and down completely randomly.
Pair Corralation between Lindab International and BillerudKorsnas
Assuming the 90 days trading horizon Lindab International AB is expected to under-perform the BillerudKorsnas. In addition to that, Lindab International is 3.52 times more volatile than BillerudKorsnas AB. It trades about -0.22 of its total potential returns per unit of risk. BillerudKorsnas AB is currently generating about 0.57 per unit of volatility. If you would invest 10,290 in BillerudKorsnas AB on November 3, 2024 and sell it today you would earn a total of 1,110 from holding BillerudKorsnas AB or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindab International AB vs. BillerudKorsnas AB
Performance |
| Timeline |
| Lindab International |
| BillerudKorsnas AB |
Lindab International and BillerudKorsnas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindab International and BillerudKorsnas
The main advantage of trading using opposite Lindab International and BillerudKorsnas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindab International 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.| Lindab International vs. Inwido AB | Lindab International vs. Nolato AB | Lindab International vs. Trelleborg AB | Lindab International vs. Peab AB |
| BillerudKorsnas vs. Holmen AB | BillerudKorsnas vs. Svenska Cellulosa Aktiebolaget | BillerudKorsnas vs. Husqvarna AB | BillerudKorsnas vs. Alfa Laval 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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