Correlation Between Bure Equity and Creades AB

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

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

Diversification Opportunities for Bure Equity and Creades AB

0.7

Correlation Coefficient

Bure Equity  Creades AB

Poor diversification

The 3 months correlation between Bure and Creades is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bure Equity AB and Creades AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creades AB and Bure Equity 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 Bure Equity AB are associated (or correlated) with Creades AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creades AB has no effect on the direction of Bure Equity i.e., Bure Equity and Creades AB go up and down completely randomly.

Pair Corralation between Bure Equity and Creades AB

Assuming the 90 days trading horizon Bure Equity AB is expected to under-perform the Creades AB. In addition to that, Bure Equity is 1.14 times more volatile than Creades AB. It trades about 0.0 of its total potential returns per unit of risk. Creades AB is currently generating about 0.18 per unit of volatility. If you would invest  6,895  in Creades AB on November 28, 2024 and sell it today you would earn a total of  1,205  from holding Creades AB or generate 17.48% return on investment over 90 days.

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

Bure Equity AB  vs.  Creades AB

Bure Equity AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bure Equity AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bure Equity is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Creades AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Creades AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Creades AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bure Equity and Creades AB

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

The idea behind Bure Equity AB and Creades 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.