Correlation Between Byggmax Group and Garo AB

Can any of the company-specific risk be diversified away by investing in both Byggmax Group and Garo 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 Byggmax Group and Garo AB 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 Garo AB, you can compare the effects of market volatilities on Byggmax Group and Garo 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 Byggmax Group with a short position of Garo AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byggmax Group and Garo AB.

Diversification Opportunities for Byggmax Group and Garo AB

-0.52

Correlation Coefficient

Byggmax Group  Garo AB

Excellent diversification

The 3 months correlation between Byggmax and Garo is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Byggmax Group AB and Garo AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garo AB 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 Garo AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garo AB has no effect on the direction of Byggmax Group i.e., Byggmax Group and Garo AB go up and down completely randomly.

Pair Corralation between Byggmax Group and Garo AB

Assuming the 90 days trading horizon Byggmax Group AB is expected to generate 0.95 times more return on investment than Garo AB. However, Byggmax Group AB is 1.05 times less risky than Garo AB. It trades about 0.08 of its potential returns per unit of risk. Garo AB is currently generating about -0.06 per unit of risk. If you would invest  3,230  in Byggmax Group AB on September 1, 2024 and sell it today you would earn a total of  1,166  from holding Byggmax Group AB or generate 36.1% return on investment over 90 days.

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

Byggmax Group AB  vs.  Garo AB

Byggmax Group AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Byggmax Group AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Byggmax Group may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Garo AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garo AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Byggmax Group and Garo AB

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

The idea behind Byggmax Group AB and Garo 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.