Correlation Between Bonheur and Arcticzymes Technologies

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

By analyzing existing cross correlation between Bonheur and Arcticzymes Technologies ASA, you can compare the effects of market volatilities on Bonheur and Arcticzymes Technologies 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 Bonheur with a short position of Arcticzymes Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bonheur and Arcticzymes Technologies.

Diversification Opportunities for Bonheur and Arcticzymes Technologies

0.76

Correlation Coefficient

Bonheur  Arcticzymes Technologies

Poor diversification

The 3 months correlation between Bonheur and Arcticzymes is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bonheur and Arcticzymes Technologies ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcticzymes Technologies and Bonheur 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 Bonheur are associated (or correlated) with Arcticzymes Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcticzymes Technologies has no effect on the direction of Bonheur i.e., Bonheur and Arcticzymes Technologies go up and down completely randomly.

Pair Corralation between Bonheur and Arcticzymes Technologies

Assuming the 90 days trading horizon Bonheur is expected to generate 0.39 times more return on investment than Arcticzymes Technologies. However, Bonheur is 2.58 times less risky than Arcticzymes Technologies. It trades about -0.1 of its potential returns per unit of risk. Arcticzymes Technologies ASA is currently generating about -0.08 per unit of risk. If you would invest  28,000  in Bonheur on October 21, 2024 and sell it today you would lose (2,150) from holding Bonheur or give up 7.68% of portfolio value over 90 days.

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

Bonheur  vs.  Arcticzymes Technologies ASA

Bonheur

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bonheur has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Arcticzymes Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcticzymes Technologies ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bonheur and Arcticzymes Technologies

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

The idea behind Bonheur and Arcticzymes Technologies ASA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.