Correlation Between BHG Group and Freemelt Holding
Can any of the company-specific risk be diversified away by investing in both BHG Group and Freemelt Holding 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 BHG Group and Freemelt Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHG Group AB and Freemelt Holding AB, you can compare the effects of market volatilities on BHG Group and Freemelt Holding 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 BHG Group with a short position of Freemelt Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHG Group and Freemelt Holding.
Diversification Opportunities for BHG Group and Freemelt Holding
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BHG and Freemelt is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BHG Group AB and Freemelt Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freemelt Holding and BHG Group 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 BHG Group AB are associated (or correlated) with Freemelt Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freemelt Holding has no effect on the direction of BHG Group i.e., BHG Group and Freemelt Holding go up and down completely randomly.
Pair Corralation between BHG Group and Freemelt Holding
Assuming the 90 days trading horizon BHG Group AB is expected to generate 0.45 times more return on investment than Freemelt Holding. However, BHG Group AB is 2.21 times less risky than Freemelt Holding. It trades about 0.12 of its potential returns per unit of risk. Freemelt Holding AB is currently generating about -0.12 per unit of risk. If you would invest 1,467 in BHG Group AB on September 26, 2024 and sell it today you would earn a total of 400.00 from holding BHG Group AB or generate 27.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BHG Group AB vs. Freemelt Holding AB
Performance |
Timeline |
BHG Group AB |
Freemelt Holding |
BHG Group and Freemelt Holding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BHG Group and Freemelt Holding
The main advantage of trading using opposite BHG Group and Freemelt Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHG Group position performs unexpectedly, Freemelt Holding 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 Freemelt Holding will offset losses from the drop in Freemelt Holding's long position.BHG Group vs. Cint Group AB | BHG Group vs. Fractal Gaming Group | BHG Group vs. Pierce Group AB | BHG Group vs. Lyko Group A |
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Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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