Correlation Between BE Group and Mekonomen

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

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

Diversification Opportunities for BE Group and Mekonomen

0.29

Correlation Coefficient

BE Group  Mekonomen

Modest diversification

The 3 months correlation between BEGR and Mekonomen is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BE Group AB and Mekonomen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekonomen AB and BE 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 BE Group AB are associated (or correlated) with Mekonomen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekonomen AB has no effect on the direction of BE Group i.e., BE Group and Mekonomen go up and down completely randomly.

Pair Corralation between BE Group and Mekonomen

Assuming the 90 days trading horizon BE Group AB is expected to under-perform the Mekonomen. But the stock apears to be less risky and, when comparing its historical volatility, BE Group AB is 1.11 times less risky than Mekonomen. The stock trades about -0.1 of its potential returns per unit of risk. The Mekonomen AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  12,783  in Mekonomen AB on September 5, 2024 and sell it today you would earn a total of  757.00  from holding Mekonomen AB or generate 5.92% return on investment over 90 days.

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

BE Group AB  vs.  Mekonomen AB

BE Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BE Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Mekonomen AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mekonomen AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Mekonomen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BE Group and Mekonomen

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

The idea behind BE Group AB and Mekonomen 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.