Correlation Between Bambuser and Realfiction Holding

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

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

Diversification Opportunities for Bambuser and Realfiction Holding

0.76

Correlation Coefficient

Bambuser  Realfiction Holding

Poor diversification

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

Pair Corralation between Bambuser and Realfiction Holding

Assuming the 90 days trading horizon Bambuser AB is expected to under-perform the Realfiction Holding. In addition to that, Bambuser is 1.58 times more volatile than Realfiction Holding AB. It trades about -0.11 of its total potential returns per unit of risk. Realfiction Holding AB is currently generating about -0.16 per unit of volatility. If you would invest  2,100  in Realfiction Holding AB on September 2, 2024 and sell it today you would lose (720.00) from holding Realfiction Holding AB or give up 34.29% of portfolio value over 90 days.

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

Bambuser AB  vs.  Realfiction Holding AB

Bambuser AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Realfiction Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Realfiction Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bambuser and Realfiction Holding

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

The idea behind Bambuser AB and Realfiction Holding 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.