Correlation Between Bure Equity and Industrivarden

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

Diversification Opportunities for Bure Equity and Industrivarden

0.76

Correlation Coefficient

Bure Equity  Industrivarden

Poor diversification

The 3 months correlation between Bure and Industrivarden is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bure Equity AB and Industrivarden AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrivarden AB ser 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 Industrivarden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrivarden AB ser has no effect on the direction of Bure Equity i.e., Bure Equity and Industrivarden go up and down completely randomly.

Pair Corralation between Bure Equity and Industrivarden

Assuming the 90 days trading horizon Bure Equity AB is expected to under-perform the Industrivarden. In addition to that, Bure Equity is 1.81 times more volatile than Industrivarden AB ser. It trades about 0.0 of its total potential returns per unit of risk. Industrivarden AB ser is currently generating about 0.22 per unit of volatility. If you would invest  35,650  in Industrivarden AB ser on November 27, 2024 and sell it today you would earn a total of  4,630  from holding Industrivarden AB ser or generate 12.99% 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.  Industrivarden AB ser

Bure Equity AB

Risk-Adjusted Performance

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.

Industrivarden AB ser

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Industrivarden AB ser are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Industrivarden sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bure Equity and Industrivarden

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

The idea behind Bure Equity AB and Industrivarden AB ser 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..