Correlation Between Bravida Holding and ALM Equity

Can any of the company-specific risk be diversified away by investing in both Bravida Holding and ALM Equity 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 ALM Equity 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 ALM Equity AB, you can compare the effects of market volatilities on Bravida Holding and ALM Equity 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 ALM Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bravida Holding and ALM Equity.

Diversification Opportunities for Bravida Holding and ALM Equity

-0.59

Correlation Coefficient

Bravida Holding  ALM Equity

Excellent diversification

The 3 months correlation between Bravida and ALM is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bravida Holding AB and ALM Equity AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALM Equity 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 ALM Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALM Equity AB has no effect on the direction of Bravida Holding i.e., Bravida Holding and ALM Equity go up and down completely randomly.

Pair Corralation between Bravida Holding and ALM Equity

Assuming the 90 days trading horizon Bravida Holding AB is expected to generate 0.36 times more return on investment than ALM Equity. However, Bravida Holding AB is 2.75 times less risky than ALM Equity. It trades about 0.19 of its potential returns per unit of risk. ALM Equity AB is currently generating about -0.2 per unit of risk. If you would invest  8,010  in Bravida Holding AB on December 30, 2024 and sell it today you would earn a total of  1,190  from holding Bravida Holding AB or generate 14.86% return on investment over 90 days.

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

Bravida Holding AB  vs.  ALM Equity 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.

ALM Equity AB

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bravida Holding and ALM Equity

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

The idea behind Bravida Holding AB and ALM Equity 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.