Correlation Between Beijer Alma and Cloetta AB

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

Diversification Opportunities for Beijer Alma and Cloetta AB

0.83

Correlation Coefficient

Beijer Alma  Cloetta AB

Very poor diversification

The 3 months correlation between Beijer and Cloetta is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Beijer Alma AB and Cloetta AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloetta 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 Cloetta AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloetta AB has no effect on the direction of Beijer Alma i.e., Beijer Alma and Cloetta AB go up and down completely randomly.

Pair Corralation between Beijer Alma and Cloetta AB

Assuming the 90 days trading horizon Beijer Alma AB is expected to generate 1.0 times more return on investment than Cloetta AB. However, Beijer Alma AB is 1.0 times less risky than Cloetta AB. It trades about 0.19 of its potential returns per unit of risk. Cloetta AB is currently generating about 0.1 per unit of risk. If you would invest  16,640  in Beijer Alma AB on December 25, 2024 and sell it today you would earn a total of  3,760  from holding Beijer Alma AB or generate 22.6% return on investment over 90 days.

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

Beijer Alma AB  vs.  Cloetta 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.

Cloetta AB

Risk-Adjusted Performance

OK

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

Pair Trading with Beijer Alma and Cloetta AB

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

The idea behind Beijer Alma AB and Cloetta 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.