Correlation Between BTS Group and Beijer Alma

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

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

Diversification Opportunities for BTS Group and Beijer Alma

0.49

Correlation Coefficient

BTS Group  Beijer Alma

Very weak diversification

The 3 months correlation between BTS and Beijer is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BTS Group AB and Beijer Alma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijer Alma AB and BTS Group 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 BTS Group AB are associated (or correlated) with Beijer Alma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijer Alma AB has no effect on the direction of BTS Group i.e., BTS Group and Beijer Alma go up and down completely randomly.

Pair Corralation between BTS Group and Beijer Alma

Assuming the 90 days trading horizon BTS Group is expected to generate 2.34 times less return on investment than Beijer Alma. But when comparing it to its historical volatility, BTS Group AB is 1.13 times less risky than Beijer Alma. It trades about 0.09 of its potential returns per unit of risk. Beijer Alma AB is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  16,540  in Beijer Alma AB on December 22, 2024 and sell it today you would earn a total of  3,810  from holding Beijer Alma AB or generate 23.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

BTS Group AB  vs.  Beijer Alma AB

BTS Group AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BTS Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BTS Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Beijer Alma AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beijer Alma AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Beijer Alma sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BTS Group and Beijer Alma

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

The idea behind BTS Group AB and Beijer Alma 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.