Correlation Between Bilia AB and Duni AB

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

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

Diversification Opportunities for Bilia AB and Duni AB

0.86

Correlation Coefficient

Bilia AB  Duni AB

Very poor diversification

The 3 months correlation between Bilia and Duni is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bilia AB and Duni AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duni AB and Bilia AB 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 Bilia AB are associated (or correlated) with Duni AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duni AB has no effect on the direction of Bilia AB i.e., Bilia AB and Duni AB go up and down completely randomly.

Pair Corralation between Bilia AB and Duni AB

Assuming the 90 days trading horizon Bilia AB is expected to generate 1.36 times more return on investment than Duni AB. However, Bilia AB is 1.36 times more volatile than Duni AB. It trades about 0.11 of its potential returns per unit of risk. Duni AB is currently generating about 0.07 per unit of risk. If you would invest  11,827  in Bilia AB on December 23, 2024 and sell it today you would earn a total of  1,703  from holding Bilia AB or generate 14.4% return on investment over 90 days.

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

Bilia AB  vs.  Duni AB

Bilia AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bilia AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Bilia AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Duni AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Duni AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Duni AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bilia AB and Duni AB

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

The idea behind Bilia AB and Duni 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.