Correlation Between Boliden AB and Alimak Hek

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

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

Diversification Opportunities for Boliden AB and Alimak Hek

0.3

Correlation Coefficient

Boliden AB  Alimak Hek

Weak diversification

The 3 months correlation between Boliden and Alimak is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Boliden 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 Boliden 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 Boliden 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 Boliden AB i.e., Boliden AB and Alimak Hek go up and down completely randomly.

Pair Corralation between Boliden AB and Alimak Hek

Assuming the 90 days trading horizon Boliden AB is expected to under-perform the Alimak Hek. In addition to that, Boliden AB is 1.19 times more volatile than Alimak Hek Group. It trades about -0.08 of its total potential returns per unit of risk. Alimak Hek Group is currently generating about -0.04 per unit of volatility. If you would invest  12,300  in Alimak Hek Group on October 9, 2024 and sell it today you would lose (320.00) from holding Alimak Hek Group or give up 2.6% of portfolio value over 90 days.

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

Boliden AB  vs.  Alimak Hek Group

Boliden AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boliden AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Boliden AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Alimak Hek Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alimak Hek Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alimak Hek 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 Boliden AB and Alimak Hek

The main advantage of trading using opposite Boliden AB and Alimak Hek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boliden AB 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 Boliden 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..