Correlation Between Boliden AB and Nederman Holding

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

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

Diversification Opportunities for Boliden AB and Nederman Holding

0.09

Correlation Coefficient

Boliden AB  Nederman Holding

Significant diversification

The 3 months correlation between Boliden and Nederman is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Boliden AB and Nederman Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nederman Holding 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 Nederman Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nederman Holding has no effect on the direction of Boliden AB i.e., Boliden AB and Nederman Holding go up and down completely randomly.

Pair Corralation between Boliden AB and Nederman Holding

Assuming the 90 days trading horizon Boliden AB is expected to generate 0.93 times more return on investment than Nederman Holding. However, Boliden AB is 1.07 times less risky than Nederman Holding. It trades about 0.04 of its potential returns per unit of risk. Nederman Holding AB is currently generating about -0.14 per unit of risk. If you would invest  33,860  in Boliden AB on October 24, 2024 and sell it today you would earn a total of  1,000.00  from holding Boliden AB or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Boliden AB  vs.  Nederman Holding AB

Boliden AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boliden AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Boliden AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Nederman Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nederman Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Boliden AB and Nederman Holding

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

The idea behind Boliden AB and Nederman Holding 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .