Correlation Between Byggmax Group and Nordnet AB

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

Diversification Opportunities for Byggmax Group and Nordnet AB

0.23

Correlation Coefficient

Byggmax Group  Nordnet AB

Modest diversification

The 3 months correlation between Byggmax and Nordnet is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Byggmax Group AB and Nordnet AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordnet 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 Nordnet AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordnet AB has no effect on the direction of Byggmax Group i.e., Byggmax Group and Nordnet AB go up and down completely randomly.

Pair Corralation between Byggmax Group and Nordnet AB

Assuming the 90 days trading horizon Byggmax Group AB is expected to under-perform the Nordnet AB. In addition to that, Byggmax Group is 1.79 times more volatile than Nordnet AB. It trades about -0.01 of its total potential returns per unit of risk. Nordnet AB is currently generating about 0.19 per unit of volatility. If you would invest  22,140  in Nordnet AB on September 1, 2024 and sell it today you would earn a total of  1,500  from holding Nordnet AB or generate 6.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Byggmax Group AB  vs.  Nordnet 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.

Nordnet AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordnet AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Nordnet AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Byggmax Group and Nordnet AB

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

The idea behind Byggmax Group AB and Nordnet 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.