Correlation Between Beijer Ref and BTS Group

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

Diversification Opportunities for Beijer Ref and BTS Group

0.52

Correlation Coefficient

Beijer Ref  BTS Group

Very weak diversification

The 3 months correlation between Beijer and BTS is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Beijer Ref 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 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 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 Ref i.e., Beijer Ref and BTS Group go up and down completely randomly.

Pair Corralation between Beijer Ref and BTS Group

Assuming the 90 days trading horizon Beijer Ref AB is expected to under-perform the BTS Group. In addition to that, Beijer Ref is 1.07 times more volatile than BTS Group AB. It trades about -0.11 of its total potential returns per unit of risk. BTS Group AB is currently generating about 0.03 per unit of volatility. If you would invest  26,300  in BTS Group AB on December 30, 2024 and sell it today you would earn a total of  600.00  from holding BTS Group AB or generate 2.28% return on investment over 90 days.

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

Beijer Ref AB  vs.  BTS 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 latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BTS Group AB

Risk-Adjusted Performance

Weak

Over the last 90 days BTS Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BTS Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Beijer Ref and BTS Group

The main advantage of trading using opposite Beijer Ref and BTS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijer Ref 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 Ref 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.