Correlation Between Mondi PLC and BillerudKorsnäs
Can any of the company-specific risk be diversified away by investing in both Mondi PLC and BillerudKorsnäs 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 Mondi PLC and BillerudKorsnäs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mondi PLC ADR and BillerudKorsns AB, you can compare the effects of market volatilities on Mondi PLC and BillerudKorsnäs 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 Mondi PLC with a short position of BillerudKorsnäs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mondi PLC and BillerudKorsnäs.
Diversification Opportunities for Mondi PLC and BillerudKorsnäs
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Mondi and BillerudKorsnäs is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mondi PLC ADR and BillerudKorsns AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BillerudKorsns AB and Mondi PLC 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 Mondi PLC ADR are associated (or correlated) with BillerudKorsnäs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BillerudKorsns AB has no effect on the direction of Mondi PLC i.e., Mondi PLC and BillerudKorsnäs go up and down completely randomly.
Pair Corralation between Mondi PLC and BillerudKorsnäs
Assuming the 90 days horizon Mondi PLC ADR is expected to generate 1.68 times more return on investment than BillerudKorsnäs. However, Mondi PLC is 1.68 times more volatile than BillerudKorsns AB. It trades about 0.23 of its potential returns per unit of risk. BillerudKorsns AB is currently generating about 0.27 per unit of risk. If you would invest 2,842 in Mondi PLC ADR on October 25, 2024 and sell it today you would earn a total of 143.00 from holding Mondi PLC ADR or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Mondi PLC ADR vs. BillerudKorsns AB
Performance |
| Timeline |
| Mondi PLC ADR |
| BillerudKorsns AB |
Mondi PLC and BillerudKorsnäs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mondi PLC and BillerudKorsnäs
The main advantage of trading using opposite Mondi PLC and BillerudKorsnäs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mondi PLC position performs unexpectedly, BillerudKorsnäs 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 BillerudKorsnäs will offset losses from the drop in BillerudKorsnäs' long position.The idea behind Mondi PLC ADR and BillerudKorsns AB 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.| BillerudKorsnäs vs. Oji Holdings Corp | BillerudKorsnäs vs. Nine Dragons Paper | BillerudKorsnäs vs. Nine Dragons Paper | BillerudKorsnäs vs. Canfor Pulp Products |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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