Correlation Between Bactiquant and Broendbyernes

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

By analyzing existing cross correlation between Bactiquant AS and Broendbyernes IF Fodbold, you can compare the effects of market volatilities on Bactiquant and Broendbyernes 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 Bactiquant with a short position of Broendbyernes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bactiquant and Broendbyernes.

Diversification Opportunities for Bactiquant and Broendbyernes

0.01

Correlation Coefficient

Bactiquant  Broendbyernes

Significant diversification

The 3 months correlation between Bactiquant and Broendbyernes is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bactiquant AS and Broendbyernes IF Fodbold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broendbyernes IF Fodbold and Bactiquant 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 Bactiquant AS are associated (or correlated) with Broendbyernes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broendbyernes IF Fodbold has no effect on the direction of Bactiquant i.e., Bactiquant and Broendbyernes go up and down completely randomly.

Pair Corralation between Bactiquant and Broendbyernes

Assuming the 90 days trading horizon Bactiquant AS is expected to generate 4.08 times more return on investment than Broendbyernes. However, Bactiquant is 4.08 times more volatile than Broendbyernes IF Fodbold. It trades about 0.03 of its potential returns per unit of risk. Broendbyernes IF Fodbold is currently generating about -0.13 per unit of risk. If you would invest  545.00  in Bactiquant AS on October 20, 2024 and sell it today you would lose (97.00) from holding Bactiquant AS or give up 17.8% of portfolio value over 90 days.

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

Bactiquant AS  vs.  Broendbyernes IF Fodbold

Bactiquant AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bactiquant AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Bactiquant sustained solid returns over the last few months and may actually be approaching a breakup point.

Broendbyernes IF Fodbold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broendbyernes IF Fodbold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bactiquant and Broendbyernes

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

The idea behind Bactiquant AS and Broendbyernes IF Fodbold 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.