Correlation Between Borregaard ASA and Bouvet

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

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

Diversification Opportunities for Borregaard ASA and Bouvet

-0.74

Correlation Coefficient

Borregaard ASA  Bouvet

Pay attention - limited upside

The 3 months correlation between Borregaard and Bouvet is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Borregaard ASA and Bouvet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouvet and Borregaard ASA 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 Borregaard ASA are associated (or correlated) with Bouvet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouvet has no effect on the direction of Borregaard ASA i.e., Borregaard ASA and Bouvet go up and down completely randomly.

Pair Corralation between Borregaard ASA and Bouvet

Assuming the 90 days trading horizon Borregaard ASA is expected to under-perform the Bouvet. In addition to that, Borregaard ASA is 1.14 times more volatile than Bouvet. It trades about -0.07 of its total potential returns per unit of risk. Bouvet is currently generating about 0.11 per unit of volatility. If you would invest  6,894  in Bouvet on September 15, 2024 and sell it today you would earn a total of  646.00  from holding Bouvet or generate 9.37% return on investment over 90 days.

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

Borregaard ASA  vs.  Bouvet

Borregaard ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Borregaard ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Bouvet

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bouvet are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Bouvet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Borregaard ASA and Bouvet

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

The idea behind Borregaard ASA and Bouvet 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.