Correlation Between Beowulf Mining and Peab AB

Can any of the company-specific risk be diversified away by investing in both Beowulf Mining and Peab 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 Beowulf Mining and Peab AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Beowulf Mining and Peab AB

-0.22

Correlation Coefficient

Beowulf Mining  Peab AB

Very good diversification

The 3 months correlation between Beowulf and Peab is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Beowulf Mining PLC and Peab AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peab AB and Beowulf Mining 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 Beowulf Mining PLC are associated (or correlated) with Peab AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peab AB has no effect on the direction of Beowulf Mining i.e., Beowulf Mining and Peab AB go up and down completely randomly.

Pair Corralation between Beowulf Mining and Peab AB

Assuming the 90 days trading horizon Beowulf Mining PLC is expected to under-perform the Peab AB. In addition to that, Beowulf Mining is 2.48 times more volatile than Peab AB. It trades about -0.08 of its total potential returns per unit of risk. Peab AB is currently generating about -0.01 per unit of volatility. If you would invest  7,745  in Peab AB on October 10, 2024 and sell it today you would lose (165.00) from holding Peab AB or give up 2.13% of portfolio value over 90 days.

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

Beowulf Mining PLC  vs.  Peab AB

Beowulf Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beowulf Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Peab AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Beowulf Mining and Peab AB

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

The idea behind Beowulf Mining PLC and Peab 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.