Correlation Between Bravida Holding and Afry AB

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

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

Diversification Opportunities for Bravida Holding and Afry AB

0.97

Correlation Coefficient

Bravida Holding  Afry AB

Almost no diversification

The 3 months correlation between Bravida and Afry is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Bravida Holding AB and Afry AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afry AB and Bravida Holding 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 Bravida Holding AB are associated (or correlated) with Afry AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afry AB has no effect on the direction of Bravida Holding i.e., Bravida Holding and Afry AB go up and down completely randomly.

Pair Corralation between Bravida Holding and Afry AB

Assuming the 90 days trading horizon Bravida Holding is expected to generate 1.75 times less return on investment than Afry AB. But when comparing it to its historical volatility, Bravida Holding AB is 1.7 times less risky than Afry AB. It trades about 0.19 of its potential returns per unit of risk. Afry AB is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  15,370  in Afry AB on December 30, 2024 and sell it today you would earn a total of  4,130  from holding Afry AB or generate 26.87% return on investment over 90 days.

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

Bravida Holding AB  vs.  Afry AB

Bravida Holding AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bravida Holding AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bravida Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Afry AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Afry AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Afry AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bravida Holding and Afry AB

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

The idea behind Bravida Holding AB and Afry 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.