Correlation Between Mekonomen and Bong AB
Can any of the company-specific risk be diversified away by investing in both Mekonomen and Bong 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 Mekonomen and Bong AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mekonomen AB and Bong AB, you can compare the effects of market volatilities on Mekonomen and Bong 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 Mekonomen with a short position of Bong AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekonomen and Bong AB.
Diversification Opportunities for Mekonomen and Bong AB
Weak diversification
The 3 months correlation between Mekonomen and Bong is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Bong AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bong AB and Mekonomen 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 Mekonomen AB are associated (or correlated) with Bong AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bong AB has no effect on the direction of Mekonomen i.e., Mekonomen and Bong AB go up and down completely randomly.
Pair Corralation between Mekonomen and Bong AB
Assuming the 90 days trading horizon Mekonomen AB is expected to under-perform the Bong AB. But the stock apears to be less risky and, when comparing its historical volatility, Mekonomen AB is 1.7 times less risky than Bong AB. The stock trades about -0.19 of its potential returns per unit of risk. The Bong AB is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 86.00 in Bong AB on August 30, 2024 and sell it today you would lose (6.00) from holding Bong AB or give up 6.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Mekonomen AB vs. Bong AB
Performance |
| Timeline |
| Mekonomen AB |
| Bong AB |
Mekonomen and Bong AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mekonomen and Bong AB
The main advantage of trading using opposite Mekonomen and Bong AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mekonomen position performs unexpectedly, Bong 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 Bong AB will offset losses from the drop in Bong AB's long position.| Mekonomen vs. Thule Group AB | Mekonomen vs. Sinch AB | Mekonomen vs. Hexatronic Group AB | Mekonomen vs. NIBE Industrier 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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