Correlation Between BE Group and Northgold

Can any of the company-specific risk be diversified away by investing in both BE Group and Northgold 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 Northgold 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 Northgold AB, you can compare the effects of market volatilities on BE Group and Northgold 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 Northgold. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Group and Northgold.

Diversification Opportunities for BE Group and Northgold

0.28

Correlation Coefficient

BE Group  Northgold

Modest diversification

The 3 months correlation between BEGR and Northgold is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BE Group AB and Northgold AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northgold 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 Northgold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northgold AB has no effect on the direction of BE Group i.e., BE Group and Northgold go up and down completely randomly.

Pair Corralation between BE Group and Northgold

Assuming the 90 days trading horizon BE Group AB is expected to generate 0.35 times more return on investment than Northgold. However, BE Group AB is 2.9 times less risky than Northgold. It trades about -0.05 of its potential returns per unit of risk. Northgold AB is currently generating about -0.05 per unit of risk. If you would invest  7,978  in BE Group AB on December 2, 2024 and sell it today you would lose (3,318) from holding BE Group AB or give up 41.59% of portfolio value over 90 days.

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

BE Group AB  vs.  Northgold AB

BE Group AB

Risk-Adjusted Performance

Weak

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

Northgold AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Northgold AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Northgold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BE Group and Northgold

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

The idea behind BE Group AB and Northgold 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.