Correlation Between Beijer Ref and Troax Group

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

Diversification Opportunities for Beijer Ref and Troax Group

0.37

Correlation Coefficient

Beijer Ref  Troax Group

Weak diversification

The 3 months correlation between Beijer and Troax is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Beijer Ref AB and Troax Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Troax 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 Troax Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Troax Group AB has no effect on the direction of Beijer Ref i.e., Beijer Ref and Troax Group go up and down completely randomly.

Pair Corralation between Beijer Ref and Troax Group

Assuming the 90 days trading horizon Beijer Ref AB is expected to generate 1.2 times more return on investment than Troax Group. However, Beijer Ref is 1.2 times more volatile than Troax Group AB. It trades about 0.01 of its potential returns per unit of risk. Troax Group AB is currently generating about -0.04 per unit of risk. If you would invest  17,262  in Beijer Ref AB on August 31, 2024 and sell it today you would lose (62.00) from holding Beijer Ref AB or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Beijer Ref AB  vs.  Troax Group AB

Beijer Ref AB

Risk-Adjusted Performance

0 of 100

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.

Troax Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Beijer Ref and Troax Group

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

The idea behind Beijer Ref AB and Troax 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.