Correlation Between Absolent Group and Beijer Ref

Can any of the company-specific risk be diversified away by investing in both Absolent Group and Beijer Ref 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 Absolent Group and Beijer Ref into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Absolent Group AB and Beijer Ref AB, you can compare the effects of market volatilities on Absolent Group and Beijer Ref 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 Absolent Group with a short position of Beijer Ref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolent Group and Beijer Ref.

Diversification Opportunities for Absolent Group and Beijer Ref

0.09

Correlation Coefficient

Absolent Group  Beijer Ref

Significant diversification

The 3 months correlation between Absolent and Beijer is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Absolent Group AB and Beijer Ref AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijer Ref AB and Absolent 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 Absolent Group AB are associated (or correlated) with Beijer Ref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijer Ref AB has no effect on the direction of Absolent Group i.e., Absolent Group and Beijer Ref go up and down completely randomly.

Pair Corralation between Absolent Group and Beijer Ref

Assuming the 90 days trading horizon Absolent Group AB is expected to under-perform the Beijer Ref. But the stock apears to be less risky and, when comparing its historical volatility, Absolent Group AB is 1.27 times less risky than Beijer Ref. The stock trades about -0.29 of its potential returns per unit of risk. The Beijer Ref AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  16,928  in Beijer Ref AB on September 4, 2024 and sell it today you would earn a total of  32.00  from holding Beijer Ref AB or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Absolent Group AB  vs.  Beijer Ref AB

Absolent Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Absolent Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Beijer Ref AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijer Ref AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Beijer Ref is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Absolent Group and Beijer Ref

The main advantage of trading using opposite Absolent Group and Beijer Ref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolent Group position performs unexpectedly, Beijer Ref 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 Beijer Ref will offset losses from the drop in Beijer Ref's long position.

The idea behind Absolent Group AB and Beijer Ref 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .