Correlation Between Smart Eye and BICO Group
Can any of the company-specific risk be diversified away by investing in both Smart Eye and BICO 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 Smart Eye and BICO Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Eye AB and BICO Group AB, you can compare the effects of market volatilities on Smart Eye and BICO 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 Smart Eye with a short position of BICO Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Eye and BICO Group.
Diversification Opportunities for Smart Eye and BICO Group
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smart and BICO is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Smart Eye AB and BICO Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BICO Group AB and Smart Eye 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 Smart Eye AB are associated (or correlated) with BICO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BICO Group AB has no effect on the direction of Smart Eye i.e., Smart Eye and BICO Group go up and down completely randomly.
Pair Corralation between Smart Eye and BICO Group
Assuming the 90 days trading horizon Smart Eye AB is expected to generate 0.79 times more return on investment than BICO Group. However, Smart Eye AB is 1.26 times less risky than BICO Group. It trades about 0.04 of its potential returns per unit of risk. BICO Group AB is currently generating about 0.01 per unit of risk. If you would invest 4,670 in Smart Eye AB on August 29, 2024 and sell it today you would earn a total of 1,310 from holding Smart Eye AB or generate 28.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smart Eye AB vs. BICO Group AB
Performance |
| Timeline |
| Smart Eye AB |
| BICO Group AB |
Smart Eye and BICO Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Eye and BICO Group
The main advantage of trading using opposite Smart Eye and BICO Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Eye position performs unexpectedly, BICO 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 BICO Group will offset losses from the drop in BICO Group's long position.| Smart Eye vs. Media and Games | Smart Eye vs. Upsales Technology AB | Smart Eye vs. Fractal Gaming Group | Smart Eye vs. Lundin Mining |
| BICO Group vs. KABE Group AB | BICO Group vs. IAR Systems Group | BICO Group vs. Mekonomen AB | BICO Group vs. eEducation Albert 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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