Correlation Between Boliden AB and Troax Group

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

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

Diversification Opportunities for Boliden AB and Troax Group

0.11

Correlation Coefficient

Boliden AB  Troax Group

Average diversification

The 3 months correlation between Boliden and Troax is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Boliden AB and Troax Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Troax Group 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 Troax Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Troax Group AB has no effect on the direction of Boliden AB i.e., Boliden AB and Troax Group go up and down completely randomly.

Pair Corralation between Boliden AB and Troax Group

Assuming the 90 days trading horizon Boliden AB is expected to generate 1.36 times more return on investment than Troax Group. However, Boliden AB is 1.36 times more volatile than Troax Group AB. It trades about 0.01 of its potential returns per unit of risk. Troax Group AB is currently generating about -0.09 per unit of risk. If you would invest  33,940  in Boliden AB on September 5, 2024 and sell it today you would earn a total of  70.00  from holding Boliden AB or generate 0.21% return on investment over 90 days.

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

Boliden AB  vs.  Troax Group AB

Boliden AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boliden AB are ranked lower than 10 (%) 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.

Troax Group AB

Risk-Adjusted Performance

1 of 100

Weak

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

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

The idea behind Boliden AB and Troax Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.