Correlation Between Bergman Beving and AddLife AB

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

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

Diversification Opportunities for Bergman Beving and AddLife AB

0.45

Correlation Coefficient

Bergman Beving  AddLife AB

Very weak diversification

The 3 months correlation between Bergman and AddLife is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bergman Beving AB and AddLife AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AddLife AB and Bergman Beving 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 Bergman Beving AB are associated (or correlated) with AddLife AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AddLife AB has no effect on the direction of Bergman Beving i.e., Bergman Beving and AddLife AB go up and down completely randomly.

Pair Corralation between Bergman Beving and AddLife AB

Assuming the 90 days trading horizon Bergman Beving AB is expected to generate 0.92 times more return on investment than AddLife AB. However, Bergman Beving AB is 1.09 times less risky than AddLife AB. It trades about -0.09 of its potential returns per unit of risk. AddLife AB is currently generating about -0.13 per unit of risk. If you would invest  30,000  in Bergman Beving AB on September 3, 2024 and sell it today you would lose (3,450) from holding Bergman Beving AB or give up 11.5% of portfolio value over 90 days.

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

Bergman Beving AB  vs.  AddLife AB

Bergman Beving AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

AddLife AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AddLife AB 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 forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bergman Beving and AddLife AB

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

The idea behind Bergman Beving AB and AddLife 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 Global Correlations module to find global opportunities by holding instruments from different markets.