Correlation Between Beijer Ref and NIBE Industrier

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

Diversification Opportunities for Beijer Ref and NIBE Industrier

0.46

Correlation Coefficient

Beijer Ref  NIBE Industrier

Very weak diversification

The 3 months correlation between Beijer and NIBE is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Beijer Ref AB and NIBE Industrier AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIBE Industrier 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 NIBE Industrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIBE Industrier AB has no effect on the direction of Beijer Ref i.e., Beijer Ref and NIBE Industrier go up and down completely randomly.

Pair Corralation between Beijer Ref and NIBE Industrier

Assuming the 90 days trading horizon Beijer Ref AB is expected to generate 0.6 times more return on investment than NIBE Industrier. However, Beijer Ref AB is 1.67 times less risky than NIBE Industrier. It trades about -0.03 of its potential returns per unit of risk. NIBE Industrier AB is currently generating about -0.06 per unit of risk. If you would invest  17,200  in Beijer Ref AB on November 29, 2024 and sell it today you would lose (485.00) from holding Beijer Ref AB or give up 2.82% of portfolio value over 90 days.

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

Beijer Ref AB  vs.  NIBE Industrier 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.

NIBE Industrier AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days NIBE Industrier AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Beijer Ref and NIBE Industrier

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

The idea behind Beijer Ref AB and NIBE Industrier 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 CEOs Directory module to screen CEOs from public companies around the world.