Correlation Between Boliden AB and Mekonomen

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

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

Diversification Opportunities for Boliden AB and Mekonomen

-0.28

Correlation Coefficient

Boliden AB  Mekonomen

Very good diversification

The 3 months correlation between Boliden and Mekonomen is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Boliden AB and Mekonomen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekonomen AB 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 Mekonomen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekonomen AB has no effect on the direction of Boliden AB i.e., Boliden AB and Mekonomen go up and down completely randomly.

Pair Corralation between Boliden AB and Mekonomen

Assuming the 90 days trading horizon Boliden AB is expected to generate 1.19 times more return on investment than Mekonomen. However, Boliden AB is 1.19 times more volatile than Mekonomen AB. It trades about 0.02 of its potential returns per unit of risk. Mekonomen AB is currently generating about 0.02 per unit of risk. If you would invest  33,693  in Boliden AB on December 4, 2024 and sell it today you would earn a total of  4,087  from holding Boliden AB or generate 12.13% return on investment over 90 days.

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

Boliden AB  vs.  Mekonomen AB

Boliden AB

Risk-Adjusted Performance

Modest

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

Mekonomen AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mekonomen AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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 Boliden AB and Mekonomen

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

The idea behind Boliden AB and Mekonomen 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.