Correlation Between Maj Invest and Bactiquant

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Can any of the company-specific risk be diversified away by investing in both Maj Invest and Bactiquant 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 Maj Invest and Bactiquant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maj Invest Glob and Bactiquant AS, you can compare the effects of market volatilities on Maj Invest and Bactiquant 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 Maj Invest with a short position of Bactiquant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maj Invest and Bactiquant.

Diversification Opportunities for Maj Invest and Bactiquant

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between Maj and Bactiquant is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Maj Invest Glob and Bactiquant AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bactiquant AS and Maj Invest 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 Maj Invest Glob are associated (or correlated) with Bactiquant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bactiquant AS has no effect on the direction of Maj Invest i.e., Maj Invest and Bactiquant go up and down completely randomly.

Pair Corralation between Maj Invest and Bactiquant

Assuming the 90 days trading horizon Maj Invest Glob is expected to generate 0.14 times more return on investment than Bactiquant. However, Maj Invest Glob is 7.05 times less risky than Bactiquant. It trades about 0.1 of its potential returns per unit of risk. Bactiquant AS is currently generating about 0.01 per unit of risk. If you would invest  10,220  in Maj Invest Glob on August 29, 2024 and sell it today you would earn a total of  4,005  from holding Maj Invest Glob or generate 39.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy74.19%
ValuesDaily Returns

Maj Invest Glob  vs.  Bactiquant AS

 Performance 
       Timeline  
Maj Invest Glob 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest Glob are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Maj Invest is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
Bactiquant AS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bactiquant AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Maj Invest and Bactiquant Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Maj Invest and Bactiquant

The main advantage of trading using opposite Maj Invest and Bactiquant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maj Invest position performs unexpectedly, Bactiquant 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 Bactiquant will offset losses from the drop in Bactiquant's long position.
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The idea behind Maj Invest Glob and Bactiquant AS 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.
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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