Correlation Between Alligo AB and Bergman Beving

Can any of the company-specific risk be diversified away by investing in both Alligo AB and Bergman Beving 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 Alligo AB and Bergman Beving into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Alligo AB and Bergman Beving

0.03

Correlation Coefficient

Alligo AB  Bergman Beving

Significant diversification

The 3 months correlation between Alligo and Bergman is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Alligo AB Series and Bergman Beving AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergman Beving AB and Alligo AB 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 Alligo AB Series are associated (or correlated) with Bergman Beving. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergman Beving AB has no effect on the direction of Alligo AB i.e., Alligo AB and Bergman Beving go up and down completely randomly.

Pair Corralation between Alligo AB and Bergman Beving

Assuming the 90 days trading horizon Alligo AB Series is expected to generate 1.22 times more return on investment than Bergman Beving. However, Alligo AB is 1.22 times more volatile than Bergman Beving AB. It trades about 0.1 of its potential returns per unit of risk. Bergman Beving AB is currently generating about -0.03 per unit of risk. If you would invest  12,420  in Alligo AB Series on December 26, 2024 and sell it today you would earn a total of  1,800  from holding Alligo AB Series or generate 14.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alligo AB Series  vs.  Bergman Beving AB

Alligo AB Series

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alligo AB Series are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Alligo AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Bergman Beving AB

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Alligo AB and Bergman Beving

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

The idea behind Alligo AB Series and Bergman Beving 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..