Correlation Between Arctic Blue and BHG Group

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

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

Diversification Opportunities for Arctic Blue and BHG Group

-0.3

Correlation Coefficient

Arctic Blue  BHG Group

Very good diversification

The 3 months correlation between Arctic and BHG is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Blue Beverages 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 Arctic Blue 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 Arctic Blue Beverages 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 Arctic Blue i.e., Arctic Blue and BHG Group go up and down completely randomly.

Pair Corralation between Arctic Blue and BHG Group

Assuming the 90 days trading horizon Arctic Blue Beverages is expected to generate 3.69 times more return on investment than BHG Group. However, Arctic Blue is 3.69 times more volatile than BHG Group AB. It trades about 0.16 of its potential returns per unit of risk. BHG Group AB is currently generating about 0.11 per unit of risk. If you would invest  18.00  in Arctic Blue Beverages on October 17, 2024 and sell it today you would earn a total of  25.00  from holding Arctic Blue Beverages or generate 138.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Arctic Blue Beverages  vs.  BHG Group AB

Arctic Blue Beverages

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Blue Beverages are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Arctic Blue sustained solid returns over the last few months and may actually be approaching a breakup point.

BHG Group AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BHG Group AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, BHG Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arctic Blue and BHG Group

The main advantage of trading using opposite Arctic Blue and BHG Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Blue 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.

The idea behind Arctic Blue Beverages and BHG Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.