Correlation Between Pierce Group and BHG Group
Can any of the company-specific risk be diversified away by investing in both Pierce Group and BHG Group 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 Pierce Group and BHG Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pierce Group AB and BHG Group AB, you can compare the effects of market volatilities on Pierce Group and BHG Group 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 Pierce Group with a short position of BHG Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pierce Group and BHG Group.
Diversification Opportunities for Pierce Group and BHG Group
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pierce and BHG is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pierce Group AB and BHG Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHG Group AB and Pierce Group 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 Pierce Group AB are associated (or correlated) with BHG Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHG Group AB has no effect on the direction of Pierce Group i.e., Pierce Group and BHG Group go up and down completely randomly.
Pair Corralation between Pierce Group and BHG Group
Assuming the 90 days trading horizon Pierce Group is expected to generate 4.81 times less return on investment than BHG Group. But when comparing it to its historical volatility, Pierce Group AB is 1.31 times less risky than BHG Group. It trades about 0.01 of its potential returns per unit of risk. BHG Group AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,984 in BHG Group AB on September 24, 2024 and sell it today you would lose (117.00) from holding BHG Group AB or give up 5.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pierce Group AB vs. BHG Group AB
Performance |
| Timeline |
| Pierce Group AB |
| BHG Group AB |
Pierce Group and BHG Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pierce Group and BHG Group
The main advantage of trading using opposite Pierce Group and BHG Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pierce Group position performs unexpectedly, BHG Group 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 BHG Group will offset losses from the drop in BHG Group's long position.| Pierce Group vs. Rugvista Group AB | Pierce Group vs. Karnov Group AB | Pierce Group vs. Nordic Waterproofing Holding | Pierce Group vs. BHG Group AB |
| BHG Group vs. Cint Group AB | BHG Group vs. Desenio Group AB | BHG Group vs. Fractal Gaming Group | BHG Group vs. Pierce Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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