Correlation Between New Bubbleroom and Rugvista Group

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

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

Diversification Opportunities for New Bubbleroom and Rugvista Group

0.36

Correlation Coefficient

New Bubbleroom  Rugvista Group

Weak diversification

The 3 months correlation between New and Rugvista is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding New Bubbleroom Sweden and Rugvista Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rugvista Group AB and New Bubbleroom 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 New Bubbleroom Sweden are associated (or correlated) with Rugvista Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rugvista Group AB has no effect on the direction of New Bubbleroom i.e., New Bubbleroom and Rugvista Group go up and down completely randomly.

Pair Corralation between New Bubbleroom and Rugvista Group

Assuming the 90 days trading horizon New Bubbleroom Sweden is expected to under-perform the Rugvista Group. In addition to that, New Bubbleroom is 2.06 times more volatile than Rugvista Group AB. It trades about -0.03 of its total potential returns per unit of risk. Rugvista Group AB is currently generating about 0.02 per unit of volatility. If you would invest  4,500  in Rugvista Group AB on December 30, 2024 and sell it today you would earn a total of  50.00  from holding Rugvista Group AB or generate 1.11% return on investment over 90 days.

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

New Bubbleroom Sweden  vs.  Rugvista Group AB

New Bubbleroom Sweden

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Bubbleroom Sweden has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Rugvista Group AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rugvista Group AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Rugvista Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with New Bubbleroom and Rugvista Group

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

The idea behind New Bubbleroom Sweden and Rugvista 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.