Correlation Between Beijer Alma and BTS Group

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

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

Diversification Opportunities for Beijer Alma and BTS Group

0.49

Correlation Coefficient

Beijer Alma  BTS Group

Very weak diversification

The 3 months correlation between Beijer and BTS is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Beijer Alma AB and BTS Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS Group AB and Beijer Alma 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 Beijer Alma AB are associated (or correlated) with BTS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS Group AB has no effect on the direction of Beijer Alma i.e., Beijer Alma and BTS Group go up and down completely randomly.

Pair Corralation between Beijer Alma and BTS Group

Assuming the 90 days trading horizon Beijer Alma AB is expected to generate 1.13 times more return on investment than BTS Group. However, Beijer Alma is 1.13 times more volatile than BTS Group AB. It trades about 0.19 of its potential returns per unit of risk. BTS Group AB is currently generating about 0.09 per unit of risk. If you would invest  16,540  in Beijer Alma AB on December 22, 2024 and sell it today you would earn a total of  3,810  from holding Beijer Alma AB or generate 23.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Beijer Alma AB  vs.  BTS Group AB

Beijer Alma AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beijer Alma AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Beijer Alma sustained solid returns over the last few months and may actually be approaching a breakup point.

BTS Group AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BTS Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BTS Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Beijer Alma and BTS Group

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

The idea behind Beijer Alma AB and BTS 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.