Correlation Between Beijer Ref and Absolent Group

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

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

Diversification Opportunities for Beijer Ref and Absolent Group

-0.34

Correlation Coefficient

Beijer Ref  Absolent Group

Very good diversification

The 3 months correlation between Beijer and Absolent is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Beijer Ref AB and Absolent Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolent Group AB and Beijer Ref 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 Ref AB are associated (or correlated) with Absolent Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolent Group AB has no effect on the direction of Beijer Ref i.e., Beijer Ref and Absolent Group go up and down completely randomly.

Pair Corralation between Beijer Ref and Absolent Group

Assuming the 90 days trading horizon Beijer Ref AB is expected to under-perform the Absolent Group. But the stock apears to be less risky and, when comparing its historical volatility, Beijer Ref AB is 1.95 times less risky than Absolent Group. The stock trades about -0.05 of its potential returns per unit of risk. The Absolent Group AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  22,600  in Absolent Group AB on December 1, 2024 and sell it today you would earn a total of  5,300  from holding Absolent Group AB or generate 23.45% return on investment over 90 days.

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

Beijer Ref AB  vs.  Absolent Group AB

Beijer Ref AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beijer Ref AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Beijer Ref is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Absolent Group AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Absolent Group AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Absolent Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beijer Ref and Absolent Group

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

The idea behind Beijer Ref AB and Absolent 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.