Correlation Between AB Volvo and BICO Group
Can any of the company-specific risk be diversified away by investing in both AB Volvo 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 AB Volvo and BICO Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AB Volvo and BICO Group AB, you can compare the effects of market volatilities on AB Volvo 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 AB Volvo with a short position of BICO Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AB Volvo and BICO Group.
Diversification Opportunities for AB Volvo and BICO Group
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VOLV-A and BICO is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding AB Volvo 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 AB Volvo 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 AB Volvo 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 AB Volvo i.e., AB Volvo and BICO Group go up and down completely randomly.
Pair Corralation between AB Volvo and BICO Group
Assuming the 90 days trading horizon AB Volvo is expected to under-perform the BICO Group. But the stock apears to be less risky and, when comparing its historical volatility, AB Volvo is 2.74 times less risky than BICO Group. The stock trades about 0.0 of its potential returns per unit of risk. The BICO Group AB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 4,160 in BICO Group AB on August 27, 2024 and sell it today you would lose (520.00) from holding BICO Group AB or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AB Volvo vs. BICO Group AB
Performance |
| Timeline |
| AB Volvo |
| BICO Group AB |
AB Volvo and BICO Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AB Volvo and BICO Group
The main advantage of trading using opposite AB Volvo and BICO Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AB Volvo 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.| AB Volvo vs. Investor AB ser | AB Volvo vs. Sandvik AB | AB Volvo vs. Svenska Handelsbanken AB | AB Volvo vs. Atlas Copco AB |
| BICO Group vs. Sinch AB | BICO Group vs. Hexatronic Group AB | BICO Group vs. Surgical Science Sweden | BICO Group vs. Embracer 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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