Correlation Between Byggmax Group and Alimak Hek

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

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

Diversification Opportunities for Byggmax Group and Alimak Hek

0.05

Correlation Coefficient

Byggmax Group  Alimak Hek

Significant diversification

The 3 months correlation between Byggmax and Alimak is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Byggmax Group AB and Alimak Hek Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimak Hek Group and Byggmax 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 Byggmax Group AB are associated (or correlated) with Alimak Hek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimak Hek Group has no effect on the direction of Byggmax Group i.e., Byggmax Group and Alimak Hek go up and down completely randomly.

Pair Corralation between Byggmax Group and Alimak Hek

Assuming the 90 days trading horizon Byggmax Group AB is expected to under-perform the Alimak Hek. In addition to that, Byggmax Group is 1.08 times more volatile than Alimak Hek Group. It trades about -0.14 of its total potential returns per unit of risk. Alimak Hek Group is currently generating about 0.0 per unit of volatility. If you would invest  12,000  in Alimak Hek Group on October 5, 2024 and sell it today you would lose (20.00) from holding Alimak Hek Group or give up 0.17% of portfolio value over 90 days.

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

Byggmax Group AB  vs.  Alimak Hek Group

Byggmax Group AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Byggmax Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Byggmax Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alimak Hek Group

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Byggmax Group and Alimak Hek

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

The idea behind Byggmax Group AB and Alimak Hek Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.